Banking Service 



What a Bank 

with a Trust Department 

Can Do for You 




By 

The Officers 

of the 

Rhode Island 
Hospital Trust Company 

Providence 



yft 






JfA- 



Copyright, 1922, by 

Rhode Island Hospital Trust Company 

Providence, Rhode Island 



* 29, 

'^©CU700981 






I Table of Contents 

page 

I. Foreword: A Complete Financial Institution ... 7 

II. The Bank as a Depositary 9 

Three Classes of Accounts 9 

How to open an Account 10 

The Signature Card 10 

The Pass Book or Record of Deposits . . . .11 

The Participation Book : .11 

Checking or Call Accounts 12 

Commercial Accounts 13 

Corporations 13 

Partnerships 13 

Active Accounts of Institutions 13 

Individuals' Checking Accounts 14 

Checking Accounts for Reserve Funds . . . .14 

Checking Accounts for Special Funds 14 

Checking Accounts for Temporary Funds . . . .17 

The Bank Check 17 

How to Write a Check 17 

How to Endorse a Check 18 

Endorsement Stamps 20 

Forgeries and Alterations 20 

Checks Printed on Safety Paper 21 

Voucher Checks 21 

Certified Checks 22 

Counter Checks 22 

Stopping Payment 22 

Record of Checks 23 

Uncollected Funds 24 

The Deposit Ticket 24 

Stale Checks 24 

Your Statement 25 

Certificates of Deposit 25 

As a Temporary Investment for Surplus Funds . . 26 

Negotiability 26 



PAGE 

Participation or Savings Accounts 27 

The Savings Account as an Investment . . . .27 
Advantages over Ordinary Investments .... 28 
The Participation Book 29 

Accounts in the Names of Two Persons 29 

III. Loans 30 

Promissory Notes '. . . . . . . . . .31 

Three Classes of Loans . . . 32 

Collateral Loans 32 

Endorsed Notes . . ' . 32 

Commercial Loans . . .37 

Discounting Trade Notes and Acceptances . ... 38 

Why Borrow — and when 38 

Loans to Make up Seasonal Shortages . . . .39 

Loans to Discount Bills 40 

Loans to take Advantage of Markets . . . . .40 
Loans to Finance Extensions 41 

IV. Member of Federal Reserve System 42 

Twelve Federal Reserve Districts . ... . .42 

A Great Financial Reservoir 43 

Re-discount Feature 43 

Re-discount Eligibility 44 

Federal Reserve Notes . .44 

Stability of Credit 44 

V. Special Business Service . . 46 

Credit Information . . .46 

Information on Trade Conditions 46 

Drafts 47 

Transfer of Funds by Telegraph or Cable . . . . .47 

On Raising Capital 47 

On Starting in Business . . . . . . .47 

On Forming a Business Policy . . . ". . . .48 

VI. Foreign Department 49 

To Facilitate Exports and Imports 49 

Foreign Currency . . . . . . . . . . .49 

Foreign Trade Opportunities . . . . . . .50 

Funds for Travelers . .50 

Travelers' Cheques . . . . . . . . .50 

Travelers' Letters of Credit . . . . . . .50 

Miscellaneous Services . .51 



PAGE 

VII. Acceptances 57 

The Trade Acceptance 57 

Discounting Trade Acceptances 58 

The Bank Acceptance 58 

VIII. Investment and Statistical Department .... 60 
Investments 60 

Investments Should be Made Cautiously and Intelligently 61 

IX. Mortgage and Real Estate Department 62 

Property Management 63 

X. Trust Department 64 

Trust Service for Corporations 64 

Registration of Stock and Certification of Bond Issues . 64 

Transfer of Stocks . . .64 

Trustee for Bond Issues 65 

Fiscal Agent for Corporations . . .... 67 

Reorganizations 68 

Escrow Service 68 

As Agent 68 

Trust Service for Individuals 69 

Advantages of the Trust Company 69 

As Executor 70 

As Co-Executor 71 

As Administrator 71 

Trusts Under Will 72 

As Trustee 77 

Voluntary or Living Trusts 77 

As Guardian 80 

As Conservator 81 

As Agent for Security Owners 81 

As Financial Agent 83 

As Agent for Treasurer S3 

As Agent for Executor or Trustee 84 

XI. Safe Deposit Department . .85 

500-ton Vault . . 85 

Identification 86 

Boxes of all Sizes 87 

To Keep Valuable Papers 88 

Bulk Storage for Household Valuables 89 

XII. Agricultural Department 90 

Working Capital for Farmers . 90 

Useful Information 91 

XIII. Conclusion: Ask Your Banker 92 



Illustrations 



page 
Bank Check Correctly Written . . . . . . . .15 

Bank Check Endorsed in Full 15 

Bank Check Endorsed in Blank . 15 

Bank Check Written with Check-Writing Machine . . .16 

Deposit Ticket Properly Filled Out 16 

Pass Slip to Safe Deposit Vault 16 

Voucher Check . . . . 33 

Certified Check 33 

Check as Passed through Clearing 3$ 

Customer's Statement 34 

Reconcilement Blank which Appears on Customer's Statement 35 

Collateral Note 36 

Endorsed Note 53 

Endorsed Note Made Payable to Endorser 53 

Trade Acceptance 53 

Bank Acceptance 54 

Certificate of Deposit 54 

Import Letter of Credit . 55 

Export Letter of Credit 56 

Foreign Draft in Sterling . . .73 

Foreign Draft in Francs 73 

Foreign Draft in Lire 73 

Travelers' Letter of Credit (Face) 74 

Travelers' Letter of Credit (Endorsement) 75 

Travelers' Cheque (American Express Company) . . . . 76 

Travelers' Cheque (American Bankers Ass'n) . . . . 76 

Coupon Collection Forms . . ... . . . .93 

Agricultural Financial Statement 94 



Foreword 



A Complete Financial Institution 

THE principles underlying modern banking are today no 
different from what they were hundreds of years ago. 
Originally, a man having accumulated a sum of money 
larger than he could put to profitable personal use, began to lend 
it to others who could make good use of it and who were willing 
to pay for the privilege. Later this same man, who had developed 
what might be called the " credit sense," i. e., the ability of judg- 
ing wisely as to whom a loan might be made with assurance that 
at the proper time it would be repaid, was asked by others to lend 
their money for them also. He accepted their funds to be placed 
out at interest, and shared the profits with the owners. These, 
we may assume, were the beginnings of the modern bank, and 
have continued without essential change to this day. Necessarily, 
there has been an expansion in the services of the bank in order 
to meet the developing needs of business and social life, but the 
primary function of banking is the same today as when originally 
conceived. 

So close is the relationship today between business and bank- 
ing, that it would be hard to conceive of either existing without 
the other. Certainly business could survive but a short time 
had it not some adequate source from which to supply its needs 
for working capital. And, on the other hand, banking never 
could be a profitable enterprise were it not for the interest re- 
ceived from the borrowings of business. 

Thus, the bank serves as a financial reservoir, receiving and 
storing funds large and small from its many depositors. From 
this reservoir the money is diverted into various channels of 
usefulness, where it is made to produce something more valuable 
than itself and thus return a profit. 



Few people there are in this day and age who are not directly 
or indirectly concerned with the banks of the country, hence 
few who are not interested in the many useful services rendered 
by the modern bank. 

This book has been carefully prepared by the Officers of 
the Rhode Island Hospital Trust Company. We present it 
with the belief that the reader will find both interest and value 
in its explanation of the various functions of a representative 
Trust Company, equipped to meet every banking requirement, 
from the handling of a simple checking account to such exacting 
responsibilities as the administration of extensive estates and 
fulfilling the many and diversified banking needs of great corpo- 
rations. 

By means of the index at the back, the reader will find this 
explanation of banking service permanently useful for reference 
purposes. 



Banking Service 

What a Bank with a Trust Department 
Can Do for You 



The Bank As A Depositary 

THE fundamental business of banking consists in lending 
money. There are two ways in which a bank obtains the 
money it lends : first, through the issuance of capital stock, 
which is bought and paid for by those who feel that their money 
will be used to advantage; and second, through deposits made 
by those who have confidence enough in the management of the 
bank to feel that their deposits will be repaid on demand, that 
loans will be made only after the credit of the borrower has been 
carefully investigated and found entirely satisfactory, and that 
investments will be made only in securities backed by good 
management, sound policies, and adequate earnings. 

Three Classes of Accounts 

There are three kinds of deposit accounts that may be opened 
with the Rhode Island Hospital Trust Company: 

1 . Call or Checking Accounts 

2. Certificates of Deposit 

3. Participation or Savings Accounts 

Just which type of account is best suited to personal require- 
ments and most beneficial to the interests of the individual 
depositor can be readily determined by reading the explanation 
of each as set forth in subsequent pages. 



10 • • BANKING SERVICE - • 

How to Open an Account 

The method of opening a bank account is the same in each 
case. 

Simply step into the bank and tell the clerk at the Information 
Desk what you desire. He will explain the requirements for 
opening the kind of account which you have in mind, and will 
conduct you to the particular department and introduce you to 
the proper officer, who will be glad to answer questions and make 
suggestions which will enable you to enjoy the best service the 
bank can render. 

The Information Clerk will be glad, also, to see that you, 
become personally acquainted with the officers in charge of other 
departments with which you may be likely to come into contact. 
It is the banker's desire that there be at all times a cordial per- 
sonal relationship between his institution and its customers, for 
this is essential to the friendly and valuable cooperation that 
the bank at all times stands ready to give. 

It makes no difference whether your account is active or 
inactive, large or small, you will find the progressive bank 
constantly and actively striving to render you banking service 
of the highest character. 

rpi Upon opening any kind of an account you will be asked 

Signature Card to ^ out a ^gnature card. This card is retained by the 
bank so that there will always be on file a specimen of 
your personal signature. This signature should be written just 
as you ordinarily sign your correspondence and other business 
papers, both as regards the form of your name, i. e., order of 
given names, initials, etc., and the style of penmanship. It is 
important for the protection of your interests that the bank be 
able to verify your signature instantly by comparison with that 
which is kept on file. 



BANKING SERVICE - • 11 



The Pass Book 



When you open a checking account, you receive a pass 
book containing space for the bank to enter all deposits 
which you make. This book should be presented each . ** 

time with your deposit, so that it will contain the bank's ^ 
acknowledgment of having received the deposit. 

If at any time you neglect to bring this pass book, make out 
a duplicate deposit ticket,* which will be stamped and returned 
to you. The teller will transfer the record to your pass book at 
some later time when you have both the ticket and the pass book 
with you. 

The bank book that is issued for your participation 
or savings account serves as your receipt for amounts . . 

deposited, and is also a complete duplicate of your savings * 

account as it appears upon the bank's ledgers. The book 
should be presented whenever you make a deposit and must be 
presented whenever you make a withdrawal. 

If at any time your participation book is lost, stolen, or 
destroyed, you can obtain a duplicate book by fulfilling certain 
requirements of procedure as set forth in the state banking laws. 

The law of Rhode Island governing the issuance of duplicate 
participation books is as follows: 

"When any person to whom a pass book has been issued by any 
. . . bank or trust company in its participation or savings depart- 
ment, to an aggregate amount, including undrawn dividends or 
interest, not exceeding the sum of fifteen hundred dollars, or the legal 
representative of such person, shall state in writing, under oath, to 
the bank ... or trust company which issued such book, that such 
book has not been hypothecated, but has been lost or destroyed, and 
shall make written application for the issue of a duplicate book there- 
for, and shall give public notice of the loss or destruction of such book 
and of such application, by advertising the same at least once a week 
for three successive weeks in a newspaper published in or nearest to 
the city or town where such corporation is located, . . . and if such 
book shall not be presented to the bank ... or trust company 



♦Deposit Tickets will be found fully explained on page 24. 



12 - - BANKING SERVICE ■ ■ 

which issued the same, and the existence of said pass book shall not 
have been made known to said corporation within three months after 
the date of the first advertisement aforesaid, such bank ... or 
trust company shall, upon proof that such public notice by adver- 
tisement has been given, issue a duplicate book therefor, and upon 
such delivery, such bank ... or trust company shall be dis- 
charged from all liability on- account of the issue of the original book." 

Chapter 237, sec. 25. 

Checking or Call Accounts 

The checking account is a safe and convenient depositary for 
active funds, viz., an account against which you desire frequently 
to draw. 

When you have made your first deposit, the bank becomes 
your debtor; it owes you the amount represented by your credit. 
You may draw as many checks as you desire, large or small, 
against this credit, so long as you keep your account in sufficient 
funds to meet withdrawals, and under these conditions the bank 
is bound to honor them. 

Banks accept the accounts of manufacturers, jobbers, ex- 
porters, importers, manufacturers' agents, mail order houses, 
public utility corporations, contracting firms, and firms engaged 
in various lines of professional service — in fact, of every kind of 
business or professional enterprise, as well as the accounts of 
individuals for their personal affairs. 

The minimum amount required to open a checking account 
varies with different banks, usually being a sum sufficient to 
give the bank assurance of the good faith of the depositor. 
After the account is opened, deposits may be of any desired size. 

The banks of Providence customarily pay interest on check- 
ing accounts on the daily balance in excess of $500, where this 
balance is maintained continuously for 30 days. An extra inter- 
est rate of }4% is paid where a balance of at least $25,000 is 
maintained for 30 days or more. 



■ . BANKING SERVICE ■ ■ 13 

In handling the active commercial accounts of its Commercial 
various customers, the bank accepts for collection checks Accounts 
and drafts drawn upon banks anywhere in the world, and 
holds the proceeds on deposit subject to check. In addition, it 
stands ready to render all the other financial services required 
in connection with commercial accounts, many of which are 
described in detail in other sections of this book. 

One of the special services of the Rhode Island Hospital Trust 
Company, which customers have found very useful, is furnishing 
cash for payrolls in bills and currency in any desired denomi- 
nations, and supplying blank forms upon which the customer can 
conveniently specify his exact requirements. 

When accounts of corporations are opened, the signa- ^ . .> 
tures of officers and others authorized to sign in behalf of 
the company must be furnished. The finances of a corporation 
are regulated by its by-laws, and a certified copy of the by-laws 
and a resolution of the board of directors authorizing individuals 
to sign must be filed with the bank. 

In the case of partnerships, the bank must be thoroughly p . , .. 
apprised of the partnership agreement as it applies to the 
account of the firm. In general, any partner is empowered to 
act for the firm in all matters pertaining to the business, his 
action binding his associates. But this rule may be modified by 
the partnership agreement, making it necessary, for instance, for 
both partners to sign checks. Obviously, in order properly to 
fulfill its legal obligations, the bank must be advised of the exact 
agreement. 

Another class of active accounts is that which is sub- A . . A . 

, . - . . . Active Accounts 

ject to check tor the running expenses of public and pn- - j ... ,. 

vate institutions, such as schools, colleges, hospitals, 

churches, and libraries. Together with serving as depositary 

for the active funds of such institutions, the modern bank is 



14 • - BANKING SERVICE - - 

equipped, through its various departments described in this book, 
to take care of all their other financial requirements. 
Individuals' Thousands of men and women deposit funds which are 

Checking su ^ ect to withdrawal by check for the payment of house- 
AccounU k°^ expenses and for other personal uses. 

On such accounts, as in the case of strictly commercial 

accounts, interest is paid by the Rhode Island Hospital Trust 

Company on balances in excess of $500, if left on deposit for at 

least a month. 

Checking It is a practice with many individuals and business 

Arc nt f organizations to accumulate reserve funds for emergencies. 

Reserve Funds If such funds are de P osited in a checking account, tjiey 
are instantly available through withdrawal by check. At 
the same time they are earning a good rate of interest, provided 
a proper daily balance is maintained, as explained heretofore. 

There are many kinds of special funds, such as a sink- 

ing fund, for instance, which owners desire to have sub- 

* ject to check, but which may lie inactive for considerable 

. 7 r. 7 periods. An ideal way of handling these funds is to 
Special Funds , ..,, ... . 

r deposit them at interest. 

Depositors should always bear in mind the fact that an extra 
interest rate of >2 of 1% is paid where a balance of at least 
$25,000 is maintained for 30 days or more. 

Trustees frequently have funds which they do not desire to put 
into permanent investments, but which should be earning interest. 
A checking account should commend itself particularly to trustees, 
executors, administrators, and guardians, in that not only does it 
pay interest, but by law such officers are exempt from personal 
liability for funds deposited with a Trust Company . (See page 84.) 

Funds handled by the treasurers of organizations, where they 
are drawn upon only occasionally, should be kept on deposit as 
interest accounts. 



BANKING SERVICE 



15 






57-33 







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' mm 7erK^L0 r£c+~t,a6 i£,&£ 



n 




0*K> 



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Bank check correctly written. 
See explanation — page 17. 




57-33 



Bank check 
endorsed in 
full. 

See explanation — page 19. 



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57-33 i 






Bank check 
endorsed in 

hi auk. 

See explanation — page 19. 







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16 



BANKING SERVICE 



L 



Providenc e ,R.I. . 



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192 



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EhodeTslandHospit^lTrust Come&ny 



57-33 



Paytothe 

ORDER OF 




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a 



EXACTLY Q/V£ MUNDRtB TWENTY EIGHT DOLLARS SIXTY THREE CENT& DOLLARS 



Coa*£ eJ> 6&t,a£ic*t!<-. 



Bank check written with 
check-writing machine. 
See explanation — page 21. 



Rhode Island Hospital Trust Co. 

DEPOSITED TO THE ACCOUNT OF 





Deposit ticket 
properly filled out. 

See explanation — page 24. 



• Drafts, whether drawn arfuiis Company or other Trust 
Coi/o&nies. Banks orBankers or otjreo'cash items, are credited only 
JFctto payment. This Company ^Collecting paper recelvedfrom 
its easterners whether the same be placed to their credit or not, acts 
only as their agent and assumes no responsibility except to exercise 
the same diligence it uses in collecting Its own paper. 



Please Endorse and List all Checks Separately. 

V ^frH^/ 2? 19 1Z 



A 



BILLS , 



i For checks on Providence write 

GHECK.i „ . ,h»m» « f Bank • , 

M For all others. name of place 



7&f<£ 



& 



Pass slip to Safe Deposit Vault. 
See explanation — page 87. 

Record of Access by 



... R~.t / 



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zrr - 



4* 



n 



UL 



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Ill 



To Safe No 




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Rhode Island Hospital Trust Company 



Safe Deposit Department 



. . BANKING SERVICE - • 17 

Corporations having issues of bonds, part of which they are 
retiring annually or at regular intervals, will find it advantageous, 
in accumulating sinking funds for this purpose, to deposit the 
money at interest. 

Individuals and corporations frequently have funds ni , . 

awaiting investment under favorable market conditions, a , 

Often when securities are sold the proceeds cannot im- ^ 7-7 

. . . . • , 1 r J- emporary Funds 

mediately be reinvested to advantage in the character 01 

securities desired. In the meantime, such funds are fully pro- 
tected and given continuous earning power when deposited in a 
checking account. 

Trustees and agents sometimes have money which they are 
holding pending settlements, and this also should be deposited 
in an interest-earning account. 

The Bank Check 

The bank check, which is merely a written order upon the 
bank to pay a specified amount of the depositor's funds, is by 
far the most common and most convenient method of transferring 
money from one person to another. It has come to be the every- 
day currency of the United States. It is conservatively esti- 
mated that checks are used in the settlement of more than 90% 
of the cash transactions in American business. 

An example of the usual form of check would read: "Pay to 
the order of John H. White $481.33, Four Hundred Eighty-one 
and 33/100 Dollars." This, together with the date, is written 
on a blank (printed) form addressed to the depositor's bank, and 
signed by the depositor. As will be noted in the illustration, the 
amount of the check is written both in numerals and in words. 
(See illustration — page 15.) 

In writing checks it is advisable to use dark ink and jt t W it 
to write with a bold pen-stroke. When filling in the -7 , 
blank spaces provided, begin as closely as possible after 



18 • • BANKING SERVICE • • 

the printed words, or, in the case of the written amount, 
start as near the left edge as possible. A line should be drawn 
after the written amount. A check properly written shows no 
blank spaces at margins or between the words and characters. 
Use plenty of ink and. write so plainly that there can be no 
question as to the amount, even by a hurried inspection. Of 
course, the amounts as given in numerals and in words should 
agree, but in case of disagreement the amount as written in 
words is held to be correct. 

The check writer's signature should always be the same and 
should conform to the signature he has given the bank upon 
opening his account. Be sure that this signature is always 
plainly written without unnecessary flourishes or underscoring, 
as thus there will be less likelihood of error upon the part of those 
who are to handle the check. 

Do not forget to fill in the date. This may seem to be an 
unnecessary suggestion, but very frequently checks from which 
the date has been omitted come into circulation and open the 
question as to what should be done. Should you receive an 
undated check you have the right to insert the date if it is known 
to you, or at least the date upon which it came into your posses- 
sion, but it is easy to see that a check either undated or dated 
wrongly may give rise to error on the part of the customer or of 
the bank. 

TT . ^ j As has been stated, the check is an order upon the 

How to Endorse , . _ _ . ^ , 

p-, 7 bank to pay a certain sum of money. But in a larger 

sense it is the transfer to another of the right to demand 

this money, which right the bank has given to its customer when 

the account was opened. In most cases the customer prefers to 

transfer his right of withdrawal rather than to obtain the actual 

cash, and the holder of a check wants to own this* right rather 

than to have possession of the cash itself. For he in turn can 

transfer this right to another or use the check for deposit to his 



. . BANKING SERVICE ■ ■ 19 

account by making proper endorsement on the check, and this 
is obviously more simple and convenient than would be the han- 
dling of so much cash. 

The holding of a check made out in your name or endorsed to 
you constitutes you the legal owner of the instrument. In order 
to transfer this title to someone else, you must endorse the check 
by writing your name upon the back. The proper place for the 
endorsement is across the left end of the reverse side of the check, 
as shown in the illustration. The first endorsement on the check 
should be written as close to the end as possible, and following 
endorsements close to the preceding endorsement, for there must 
be left room for the required notations or endorsement stamps 
of the banks through which the check is likely to pass before 
final payment. 

There are several different forms of endorsements with which 
the customer should familiarize himself. The endorsement in 
blank consists merely in writing the holder's name on the back 
of the check. (See illustration — page 15.) A check so endorsed 
is rendered negotiable and should it be lost any finder could cash 
it without further endorsement, unless, of course, the maker has 
notified the bank to stop payment. The recovery of a lost check 
endorsed in blank depends entirely upon the integrity of the one 
who happens to find it. 

A safer endorsement is known as an endorsement in full, by 
which the check is made over to a particular person or firm. (See 
illustration — page 15.) In making up your deposits endorse 
your checks in this form: 

Pay to the order of 

Rhode Island Hospital Trust Company 

Providence, R. I. 

John Smith 

This is particularly advisable when sending checks for deposit 

through the mail, as collection cannot be made of a check 



20 • • BANKING SERVICE ■ • 

endorsed in full until it bears the subsequent signature of the one 
to whom it has been endorsed. If such a check is lost or stolen 
it cannot be transferred and you are fully protected. 

An endorsement in full, however, must be carefully and 
accurately phrased. The words "to the order of" or "or order" 
in this type of endorsement render the check a negotiable in- 
strument, upon the proper signature of the endorsee; he may 
collect through whatever agency he finds convenient. But 
should these words be omitted from the form so that the endorse- 
ment would read: 

Pay to John Jones 

John Smith 
the endorsement becomes a restricted one and limits collection 
specifically to the endorsee and stops circulation of the instrument. 
Strictly speaking, to cash such a check the endorsee must person- 
ally present himself at the bank upon which the check is drawn. 
■c, j . For the convenience of any customer handling a 

, . considerable number of checks, the Rhode Island Hospital 
Trust Company furnishes without charge a rubber stamp 
bearing a correctly worded endorsement. A rubber stamped 
endorsement is good when used for making deposits only. 

c, . , It has been mentioned at a preceding point in this book 

Forgeries and . , i 1 • i 

i,. .- that when a customer opens a checking account he signs 

a signature card, which is kept on file. In signing checks 

the depositor should always sign his name as he wrote it on 

the signature card. If the teller is not familiar with the signature 

on a check he can verify it by comparison with the signature card. 

While the bank or trust company is liable for any money 

paid out on a check with a forged signature, yet it may not be 

liable for the amount paid on a check on which the signature 

is genuine but which has been so carelessly drawn that the 

amount has been raised by another person. It thus behooves 

the depositor to use due precaution in drawing all checks. 



- • BANKING SERVICE • • 21 

The first precaution in writing a check, as has been suggested 
heretofore, is to leave no blank space before or after words or 
figures. It is becoming a common practice to write in the 
amounts of checks by the use of some form of check -writing 
machine which cuts or "shreds" the amount into the paper and 
prints in indelible ink at the same time. (See illustration — 
page 16.) Not only is a check so protected difficult to alter, 
but also no question is likely to arise as to whether the customer 
has taken due precaution in drawing the check. Furthermore, 
the legibility of machine written checks is much greater than 
that of the majority of those written by pen, especially where the 
machine writes the amount in words rather than in figures only. 

However, particular care should be exercised by those who 
use check-writing machines lest a signed check be sent out by 
mistake, as has often happened, with the amount omitted and 
upon which, consequently, any amount could be written. 

The Rhode Island Hospital Trust Company furnishes ™ ■, p • f j 
all of its depositors with blank checks printed upon special e / / p ^ 

safety paper upon which no erasure, either mechanical or 
chemical, can be performed without leaving a spot which is 
instantly detected. Since every vulnerable part, including 
endorsements on the back, is protected, a check carefully and 
properly written on safety paper is about as safe an instrument 
as can be devised. 

Voucher checks, providing either on the face or back v h Ch k 
a place for statement of the bill or claim for which the 
check is issued, are frequently used by corporations and 
institutions. It is usually specified on such checks that the 
payee's endorsement constitutes a receipt in full for the items 
enumerated. (See illustration — page 33.) 

The bank officers are always glad to assist any customer in 
devising a suitable voucher check for his particular requirements. 



22 . • BANKING SERVICE - . 

r f-fi j A depositor who draws a check, or anyone who has a 

^7 7 check in his possession, may take it to the bank upon 
which it is drawn and have it certified. 

In certifying a check the teller, after ascertaining that the 
depositor has at least the amount of the check to his credit, 
stamps or writes upon the face of the check the word ' "certified" 
and the date, and signs his name as teller. (See illustration — 
page 33.) This transfers the check into an obligation of the 
bank and the bank must pay the certified check upon presenta- 
tion. The amount of the check is then deducted from the cus- 
tomer's balance and put in a special account in order that under 
no circumstances will this amount be paid to anyone other than 
the payee or upon his order. 

Never destroy a certified check. If you are not going to cash 
it, return it to the maker, and let him take it to his bank so that 
the amount of the check may be returned to his account. 

Should a customer of the Rhode Island Hospital Trust 
Company desire to make a withdrawal at a time when his 
check book is not at hand, he will find at the writing tables in 
the banking rooms special counter checks which have been 
designed for use within the bank. The counter check is in the 
form of a receipt, with stub attached for personal record of the 
drawer. When properly filled out, the counter check is honored 
by the tellers as are regular checks. 

It cannot be made "payable" to anyone and does not require 
endorsing. Nor can it be negotiated outsid,e of the Company's 
banking rooms. If a negotiable check is needed, one can readily 
be obtained from a teller or at the statement counter. 

A customer may stop payment on a check that he has 
PP g drawn ; but, of course, the stop order must reach the bank 
ay men ^ e f ore j-^e check is presented. 



• • BANKING SERVICE - • 23 

According to law, the stop order must be in writing, or in the 
form of a telegram. The law holds neither an oral nor a telephone 
request binding. Banks as a rule endeavor to comply with an 
oral request to stop payment, but strictly speaking they would 
be justified in paying a check provided it were presented before 
the written stop notice came to hand. 

In filing a stop payment order, give the date of the check, 
the number, amount, and to whose order drawn. 

Checks should be numbered consecutively as they are _ ,--,», 
, , i i . ,, .ji Record of Checks 

drawn, and memoranda made in the space provided on J 

the stub of the check book, noting the date, number, payee, and 
amount of each check. It is further advisable to make note of 
the particular item or items covered by the check. If the check 
book is properly kept with a continuous record of the bank bal- 
ance there will be less likelihood of any overdrafts. Further- 
more, the record is very useful in making up income tax re- 
turns. 

When the cancelled checks are returned by the bank they 
should be immediately compared with the memoranda in the 
check book. The depositor's record of his balance should tally 
with the balance recorded by the bank and in case of any dis- 
crepancy the depositor should notify the bank immediately. 

By following these suggestions it should be a comparatively 
easy matter to reconcile one's balance with the bank's state- 
ment: 

(1) Enter all deposits in your check book. 

(2) Enter all checks drawn. 

If you use the special form of counter check for the 
withdrawing of funds when the check book is not at 
hand, be sure to enter these withdrawals in your check 
book from the memorandum stub at the first oppor- 
tunity. 



24 • • BANKING SERVICE • • 

(3) From the total of your deposits take the total of checks 
drawn, thus giving you your balance. 

It is an unwise practice to draw against uncollected 

Uncollected r j t^ • i_ j *±. • r» *j 

_ , funds, tor instance, when one deposits in Providence a 

check drawn upon a bank in Chicago the amount is 
recorded in his account as ' 'uncollected funds." The process of 
collecting the amount of this particular check requires about 
three or four days. In the meantime, while the sum has been 
credited to the depositor's account, actually there is no cash to 
draw against until the collection is completed. The period 
required for this collection is, of course, governed by distance, 
and the depositor should allow the necessary time for such col- 
lection before drawing against the funds. Where circumstances 
are pressing, however, advice of payment of checks or other items 
drawn on banks out of town can be hastened by telegraph, and 
the funds transferred in the same manner. 

The customer should always make out deposit slips 

_ . ^. , in his own handwriting. This is very important, as a 
j-jefoosit 1 1/Cfzet 

* record is thus made which may at some future time prove 

particularly desirable. Each check should be enumerated on the 

deposit ticket: if the check is drawn on a local bank, the bank 

should be named; if drawn on an out-of-town bank, the city 

where such bank is located should be named. (See illustration — 

page 16.) 

„ , r , , Though you may not require immediate use of the 

funds, do not form the habit of holding checks. A check 
should be deposited as soon as possible after it is received, for 
should the bank upon which it is drawn or the drawer of the check 
get into difficulties while the instrument is in your possession, 
you would very likely be the loser. 

According to court decisions, checks should be deposited for 
collection within a "reasonable" length of time, and under 



• • BANKING SERVICE • • 25 

ordinary circumstances any period during which a check might 
have been conveniently deposited is considered a reasonable 
length of time. 

The best practice is to deposit all checks promptly, either 
upon the day they are received or upon the next business day. 

Banks periodically prepare an individual statement for 
each customer, which shows all entries in and withdrawals 
from his account. Customers should call for these state- 
ments as soon as possible after the date of issue so that any error 
may be noted and corrected immediately. 

The statements issued by the Rhode Island Hospital Trust 
Company are itemized in such a way that they may be easily 
balanced with the customer's check book and pass book. (See 
illustration — page 34.) Upon the back of each statement there 
appears a special reconcilement blank with detailed instructions 
as to the proper method of checking up the statement. (See 
"Record of Checks" — page 23, also illustration — page 35.) By 
making the reconcilement on this form the customer is thus 
provided a permanent record, convenient for filing and for 
reference. 

Upon very active accounts statements are issued monthly, 
but on the average account quarterly or semiannual statements 
are more satisfactory. 

Certificates of Deposit 

The second form of account is the Certificate of Deposit. 

This is a written statement by the bank certifying that the 
person designated in the instrument has deposited a specified sum 
of money payable only on return of the certificate. (See illus- 
tration — page 54.) 



26 • • BANKING SERVICE • • 

For funds that can be left undisturbed for a stated period 
of time, the certificate of deposit is a desirable form of invest- 
ment, offering as it does a combination of safety and continuous 
earnings. 

Funds deposited on a certificate of deposit earn interest from 
the day of deposit throughout the entire period for which the 
certificate is issued, instead of having to conform to regular 
interest periods as in the case of savings deposits. Interest 
rates vary according to the length of time for which the certifi- 
cate is written. The maximum rate is usually paid when the 
deposit is left for six months or longer. 

This Company issues certificates of deposit for sums of $500 
or more. 

In issuing certificates of deposit the bank reserves the right 
to redeem the certificates or to discontinue the payment of interest 
after six months from the date of issue, upon ten days' notice 
served either personally or through the mail to the payee, and 
may require the holder of the certificate to give 30 days' notice 
of intention to demand payment of the deposit. 

a j, Treasurers of corporations, associations, societies, and 

j . . r clubs, often have surplus funds on hand which they are 

S 1 hi F d not authorized to put into permanent investments. Such 

funds may well be put into certificates of deposit, so that 

instead of lying idle they will be earning interest at a favorable 

rate. 

Again, the certificate of deposit is an ideal form of temporary 
investment for money awaiting an opportunity for permanent 
use. 

A7 . • 7 .7 •, One of the special features of the certificate of deposit 

Negotiability m ■ \. . . . ... 

is that, as an obligation of the bank of issue, it is readily 

negotiable upon endorsement. 



• • BANKING SERVICE • • 27 

Participation* or Savings Accounts 

The third form of account is the Participation or Savings 
Account. 

As a means to the accumulation of funds for the accom- 
plishment of some particular purpose, a savings account will 
be found especially practicable. Whether the object be the 
repayment of a mortgage loan, the betterment of one's position 
in business, the means to education, or the creation of an emer- 
gency fund against any exigencies of the future, it can be attained 
with comparative ease by setting aside a part of one's income 
regularly, weekly or monthly, in a savings account. 

While a savings account is particularly adapted to the re- 
quirements of salaried or wage-earning people, yet its advan- 
tages are equally applicable to all. No matter in what other ways 
a person may be investing his money, a portion of it deposited 
in a savings account is a very wise provision, because it enables 
the owner to obtain cash immediately in case of an emergency. 

The character of a savings account conforms closely 

to that of a high-class security. The Savings 

Account as an 
In the first place, the depositor's money is safe beyond Investment 

question. For the protection of savings or participation 

deposits the State law prescribes certain conservative classes of 

securities in which banks must invest such deposits and further 

requires that these investments must be set apart to secure 

participation deposits. To insure the greatest possible degree of 



*The term "Participation Account," now so generally used by Trust Companies in 
the city of Providence to designate Savings Accounts, had its origin with the Rhode Island 
Hospital Trust Company in 1869. The term was coined by Mr. Binney, the Company's 
first President, to apply to deposits which participated or shared in the earnings of the 
Company, as apart from the regular Call or Checking Accounts, upon which, at that time, 
no interest was paid. 



28 ■ - BANKING SERVICE ■ ■ ^^ 

safety, the bank makes a practice of spreading its investments 
over a wide range of such securities. 

In the second place, savings deposits earn good dividends. 
The Rhode Island Hospital Trust Company has for many years 
paid dividends at the rate of 4% per annum. 

Dividends on savings deposits are payable twice yearly, on 
May 16th and November 16th. 

All or part of the principal can be withdrawn at any time 
without loss, a feature corresponding to the ready marketability 
of good securities. 

If possible, however, it is advisable to postpone withdrawals 
until the end of the semi-annual interest period, to avoid sacri- 
ficing interest. 

Under State law, banks, savings banks, and trust companies 
accepting savings deposits may reserve the right to require ninety 
days' notice of withdrawal should unusual conditions make such 
action necessary. 

In addition to those already mentioned, there are in a 

_ ° ' savings account two other important advantages not 

y shared by ordinary investment securities. 
Investments 

While a specified amount may be required to open a 

savings account, deposits may afterward be made in any con- 
venient amount. The depositor need not wait until the accumu- 
lation of a fixed sum, but may add to his savings investment 
gradually and conveniently. 

If a depositor needs to withdraw part of his savings he can 
withdraw the exact amount he requires without affecting the 
earning power of the balance. This is likely to be much more 
convenient than to be obliged to sell a security of a definite 
amount, say a bond of a denomination of $1,000, in order to 
obtain the desired sum, which may be much smaller. 



BANKING SERVICE 



29 



The participation book which is issued to all savings 
depositors must be presented whenever deposits or with- 
drawals are made. Reference to the importance of the 
participation book has already been made. (See page 11.) 

Accounts in the Names of Two Persons 



The 

Participation 

Book 



A special form of account, either savings or checking account, 
is that maintained by two persons and payable to either or the 
survivor. This form is especially convenient for husband and 
wife, although any two persons may avail themselves of it. 
Either person may make deposits to or withdrawals from such 
an account. 

If the joint account is a savings account, it should be re- 
membered that the participation book must be presented upon 
making deposits or withdrawals, as in the case of the individual 
account. 



The following table shows how savings will accumulate at 

4% credited semi-annually, with regular monthly 

deposits. The interest is figured on the 

actual time the money is on deposit. 



Monthly 


Five 


Ten 


Fifteen 


Twenty 


Twenty-five 


Deposit 


Years 


Years 


Years 


Years 


Years 


$1 


$66.46 


$147.48 


$246.24 


$366.64 


$513.39 


$5 


$332.30 


$737.40 


$1,231.20 


$1,833.20 


$2,566.95 


$10 


$664.60 


$1,474.80 


$2,462.40 


$3,666.40 


$5,133.90 


$15 


$996.90 


$2,212.20 


$3,693.60 


$5,499.60 


$7,700.85 


$20 


$1,329.20 


$2,949.60 


$4,924.80 


$7,332.80 


$10,267.80 


$25 


$1,661.50 


$3,687.00 


$6,156.00 


$9,166.00 


$12,834.75 


$50 


$3,323.00 


$7,374.00 


$12,312.00 


$18,332.00 


$25,669.50 


$75 


$4,984.50 


$11,061.00 


$18,468.00 


$27,498.00 


$38,504.25 


$100 


$6,646.00 


$14,748.00 


$24,624.00 


$36,664.00 


$51,339.00 



30 • • BANKING SERVICE 



Loans 

THE funds that the bank receives on deposit on the various 
classes of accounts described in the preceding pages, are 
available for loans to its customers, with the exception that 
the law makes strict regulations for the investment of funds 
received on deposit in the Participation or Savings Department, 
providing that the bank can lend only a limited portion of such 
funds on promissory notes. 

Lending money for the advancement of legitimate business 
interests is one of the most important services a bank renders to 
the community in which it is located, and so far as possible the 
funds in the hands of the progressive bank are utilized to aid 
business, the building of which is of mutual advantage to the 
bank and its customers. 

Almost every business, whether large or small, will meet 
occasions when, temporarily, additional money is required, and 
in the majority of cases this working capital is to be procured 
most conveniently from the bank through loans. Manufacturers 
and merchants must often make up seasonal shortages, discount 
bills, take advantage of favorable markets, and finance their 
business transactions. It is the province of a bank to lend money 
for such purposes; but, at the same time, it is the duty of the 
bank to maintain itself in what is called a liquid position, i. e., 
it must be at all times prepared to meet the usual and even the 
unusual demands of its depositors. It is obvious that if a bank 
is to keep its funds in liquid form, short time loans are the proper 
means to that end. Money needed for permanent purposes 
should be obtained from some source other than a bank, and is 



. . BANKING SERVICE • ■ 31 

ordinarily procured through an issue of bonds or additional 
capital stock. 

A large measure of credit for the growth and general healthy 
condition of American business today is due to the great financial 
institutions which have furnished the funds vitally necessary to 
business progress. A bank can have no worthier purpose than 
to promote in every legitimate way the interests of the com- 
munity in which it is located. 

Promissory Notes 

When a bank lends money to any customer, it receives his 
acknowledgment — his note — which specifies the conditions under 
which the money is to be repaid. 

A note is thus a promise to pay the bank, or some other party, 
a specified sum of money either on a definite date or on demand. 
From this it will be seen that notes are of two classes, time notes 
and demand notes. The first represents a loan made for a 
specified length of time; the second a loan made for an indefinite 
time, which ordinarily extends over periods of from a few days 
to one or two months. If the loan is for an extended period, the 
bank ordinarily requires a time note. 

In the case of the time loan, the interest is deducted from the 
face value of the note, and the remainder turned over to the 
borrower or credited to his account. This procedure is known 
as discounting the note. The full amount indicated on the face 
of the note is the amount which must be paid at maturity. 

A demand loan extends only to whatever time the bank 
desires to require payment. The borrower has the privilege of 
paying the loan at any time prior to the bank's demand, accord- 
ing to his convenience. On the other hand, the bank reserves 
the right to demand payment, upon proper notification, at any 
time, according to its own needs and existing circumstances. 
If, for any reason, a demand loan extends over a period of several 
months, the payment of interest quarterly is usually required. 



32 • • BANKING SERVICE • ■ 

Three Classes of Loans 

Generally speaking, bank loans fall into three classes: 
collateral loans, endorsed notes, and so-called commercial loans. 

C 11 t J When a bank makes a loan it is lending depositors' 

j money, and this imposes the responsibility of having the 

loan well protected. The collateral loan is the most 
common form of the protective type. In procuring such a loan, 
the customer protects the bank against loss by depositing 
negotiable securities, or in some cases warehouse receipts pledging 
readily marketable goods. (See illustration collateral note — 
page 36.) The value of this collateral must, of course, show a 
margin of safety for the bank. Furthermore, this form of loan 
requires that the collateral must be sufficient to keep the margin 
good throughout the entire period of the loan. If fluctuations 
tend to lower the value of the collateral and consequently reduce 
the margin, the borrower must deposit such additional collateral 
as will increase the margin to meet requirements, or by cash pay- 
ment reduce the loan sufficiently to satisfy margin requirements. 

Under the terms of agreement entering into such a trans- 
action, should the borrower fail to pay the loan at the specified 
time, the bank has the privilege of disposing of the collateral 
and deducting from the proceeds of such sale an amount sufficient 
to pay both the interest and principal of the loan. Also the bank 
is given the right to sell the collateral if a proper margin is not 
maintained. 

t-, , , Ar . Money may be borrowed from the bank on endorsed 

notes, or what is sometimes called two name paper. 
In this case the borrower makes a note payable to the bank and 
bearing the endorsement of another person (See illustration — 
page 53) ; or the borrower makes the note payable to the second 
person (See illustration — page 53), has him endorse it, and 
presents it to the bank to be discounted. 



BANKING SERVICE 



33 



%cu. 



ML. 



J&- 



TOTAL OF INVOICES 

LCSsil°/o DISCOUNT 

LESS FREIGHT 

TOTAL. DEDUCTIONS 

AMOUNT OF CHECH 



TW 



it: 



£J 



/? 



PAY TO THE ORDER OF 



No /fl~ 



OTHE ORDER Or / ^«— ^ 



CJ+i*c JiA**<,dlccC 4tvCu3y'-ec*0' 



S**- 



.DOLLARS 



TO THE 

RHODE ISLAND HOSPITAL TRUST CO 

PROVIDENCE, R.I. 




Zsr. &*£ £ 



Voucher check. See explanation — page 21, 



C 



57-33 




Certified check. See explanation — page 22. 



Q 



Soo 

$00 



«c o> H— "> 



• • • • CL £ •?*ej: 



• •ar, 



« • • e 



Check as passed through "clearing" and returned to maker. 
See "The Bank Check" — page 17. 



34 



BANKING SERVICE 



JOHN B. JONES 
16 MAIN STREET 
PROVIDENCE R. I . 

For month of January 1922 



Rhode Island Hospital Trust Co. 

Providence, R. I. 



Deposits are credited conditionally and not finally until the items 
contained therein are paid. This company will use due diligence in 
its endeavor to select responsible agents, but will not be liable in 
case of their failure or negligence, nor for loss of items in the mails. 



Balance Brought Forward 



25 0.00 
10 0.0 


1 0.0 
4 6.0 

2 .0 

2 5.0 


2.0 
9 0.0 



7 5.25 
557 

4 9.00 

1 2.0 



12 8.0 

5 2.0 
8 7.00 



JAN 3 
JAN 7 
JAN 1 2 
JAN 1 4 
JAN 1 6 
JAN 1 9 
JAN 2 4 
JAN 2 5 
JAN 2 6 
JAN 3 8 



1, .0 



12 5.0 
40 0.0 



7 5.0 
.71 IN 
37 5.00 



JAN 3 
JAN 7 
JAN 1 2 
JAN 1 4 
JAN 1 6 
JAN 1 9 
JAN 2 4 
JAN 2 5 
JAN 2 6 
JAN 2 Q 



7 5 0.0 
7 7 5.0 
1,17 5.0 
9 5 1.75 
91 018 
78518 
65 9>X8 
659&9 
5 5 8.89 
84339 



The last amount >m this 



KEY 

IN= Interest 

L^Totaf of checks on list enclosed 

CC=Certtfied Check 

CP= Coupons 



LNzrLoan 

Cl= Collection Item 

Q_g=Qverc!r3ft 

00*=Account Closed - 



PLEASE EXAMINE AT ONCE 



NOTIFY OF ANY PERMANENT CHANGE OF ADDRESS 



Sample statement of account as issued monthly by bank to customer 
See explanation — page 25. 



BANKING SERVICE 



35 



reconcilement of account with 
Rhode Island Hospital Trust Co. 



CHECKS OUTSTANDING 



NUMBER 


AMOUNT 


TO PROVE THE BALANCE AS SHOWN 
ON YOUR STATEMENT: 


//*"/ 


* JZO 


3f 


Sort the checks numerically or by date 
issued. 


// 6x~ 


¥ 


oo 


// 61 


// 


Zo 


Check off on the stubs of your check 


// 6¥ 


31. 


0O 


book each of the checks paid by the bank and 
make a list of the numbers and amounts of 
those still outstanding in the space provided 


// cr 


ro 


oo 








at the left; to the sum of the outstanding 
checks add the balance as shown in your 
check book. 














List below all deposits which do not 








appear on the statement, and add to this total 
the balance as shown by the statement. 

The two results should agree, and if so, 
the statement rendered is correct 




































DEPOSITS 

NOT 
CREDITED 


Zc4-/ * ZOO 


rv 












Total checks 
outstanding 


//r 


ss- 






Balance a* 
per check book 


\l 9z6. 


'? 


Bank Balance 
as per statement 


f 1 /* 


W 


Total 


*/0</} 


t9 


Total 


& /OV3 


fr? 



Reconcilement blank which appears on back of customers' statements. 
See explanation — pages 23 and 25. 



36 



BANKING SERVICE 




o fc -j *5 fi.£ !- rt 8 ** ** _, 

is 

a 
ei "3 a 



tn o 



B*i 

S *3 § '£ "£ J -^ ^ - 5*12 

I § C3ja rt^ & n .S *•* "3 60 

|a si • i 11^ $ S Z 
I a*! i " 



.a "8 



>. a 



I- 

g* 



O J3 
•S " 
^ & 

v O. 

& a 
!<3 
1* 

a) 5 
ft. "2 



a-2^ 



o *d 



"■s-oJ* § S y .& .« 



5 ta » *iu CO U^ 

A ?> T) "" rt -H ^ *fl 



*o •«. 



■ 3 ;o 






S 5 « 

g*°T3 a c KT 



, » a a .ti 
b « w ■ " 









*<3 «rj in 

a _ 
' al* 2 alii I 

lififllil tiffin 

e^ u a c 



3 § J?«~ 

^^ Is 

•1.3 I! 
4> U 



° '1 .| g 5 



3^ 



o -a 

n 3 



XI o 






•Ss 






-3 3 ?> '3 +3 u £> St cs B 1 ^" 1 
^ .3 ft. " « ^T3 W £>«-•«« © <u « In 



S J3 © 



13 & 6 






Collateral note. See explanation — page 32. 



. . BANKING SERVICE ■ • 37 

Necessarily one of the parties to such a transaction must be 
financially responsible, and it is preferable that both of them 
should be. 

It frequently happens that a merchant who has never 
borrowed and never expected to borrow, finds himself _ %a 

T OfLfl 9 

faced with an unexpected demand which he cannot meet 
without assistance. He must obtain cash, and at once. To 
wait until such a time arrives before establishing contact with 
the credit department of the bank is not good business policy. 

Banks ordinarily are glad to grant whatever credit a business 
and business conditions warrant, when the customer fulfills the 
necessary requirements governing credit transactions. 

When a customer asks for credit, the bank requires a frank 
statement, not only of the amount and nature of the credit 
desired and the purpose for which the customer will wish to 
borrow, but also the amount of assets and liabilities in the 
customer's business, his gross and net earnings, annual sales, 
amount of insurance carried, and other matters which will aid 
in determining to what extent the business is legitimately entitled 
to credit. In a well ordered bank it takes time to complete an 
investigation involving such matters, and as suggested hereto- 
fore, it is well for a merchant to establish his credit standing 
with his bank before the emergency arises. 

The interests of both bank and customer are best served 
where there is a definite understanding of what each may expect 
of the other. In requiring a financial statement, the bank is at 
once making sure of its ground and furthering the customer's 
interests by suggesting that he become accurately informed 
concerning his own financial condition. The customer thus is 
enabled to know the extent of credit for which he may reasonably 
ask, and the bank is better informed as to how well prepared the 
customer is to take care of his obligations. From the depositor's 
point of view, the bank which does not insist on full information 



38 • • BANKING SERVICE - • 

is not a satisfactory one with which to transact business. It is 
lending his money without due regard to its safety. 

Discounting Trade Notes and Acceptances 

Many merchants and manufacturers in the regular course of 
business receive notes and trade acceptances from their customers 
in settlement for goods sold or services rendered. When it is 
desired to secure immediate cash, the merchant or manufacturer 
endorses this trade paper, so called, and presents it at his bank 
for discount in the same manner as he would present one of his 
own notes. In other words, if the customer has established his 
credit with his bank, his trade notes will be discounted in the 
same manner as the notes made by the customer himself. 

The bank, of course, must hold its customer responsible for 
the payment of trade notes or acceptances in case they are not 
paid by the maker. This is a necessary requirement because it 
is quite impracticable for a bank to keep in close touch with 
customers of the borrower. 

There may be, however, exceptions to this rule. In case the 
responsibility of the maker is well known to the bank, the note 
might be discounted on the strength of the maker only. It is 
necessary, as in the case of an endorsed note, to have at least 
one party to the transaction of known responsibility. 

The Rhode Island Hospital Trust Company regularly dis- 
counts notes and acceptances (See page 58) in connection with 
the handling of commercial accounts. 

Why Borrow — and When 

No one having a legitimate need for borrowing need be timid 
about seeking credit from the bank. There is nothing about 
the transaction that is out of the ordinary. Money is a com- 
modity in business just as is cotton, or iron, or any other material 



• • BANKING SERVICE • • 39 

that enters into the processes of manufacturing. Borrowing 
money is very similar to buying goods of any sort. Modern 
banking has made the transaction one of extreme simplicity. 

Of course, it is but natural that a bank should prefer to do busi- 
ness with those with whom it is acquainted. It is for this reason 
that we have already emphasized the importance of establishing 
intimate and friendly relations with the officers of your bank 
from the moment you open your account. Know the officers, 
and know them well. Feel free at all times to consult them 
about your financial or other problems. 

Any business house or individual is invited to apply to the 
Rhode Island Hospital Trust Company for a loan, and if able to 
furnish collateral or give a satisfactory statement of financial 
condition, and assurance of ability to repay the loan, should 
encounter no difficulty in obtaining the desired credit. Previ- 
ous relations with the bank in the way of a checking account, 
or otherwise, are not requisite to the making of a loan, but it 
is natural that the bank's own customers should receive better 
rates and prior consideration. 

Many manufacturers have limited selling seasons, 
resulting in large receipts at certain times during the J 5 ° a e 

year, and relatively small receipts at others. The latter ^ easona 
is commonly spoken of as a ' 'seasonal shortage." This * 

is characteristic, also, of some wholesale and retail lines. 

In a business having such seasonal cycles, the natural practice 
would be to lay aside enough money during months of large 
receipts to carry the business through the lean months. But 
if the business is growing, this method may become impracticable, 
as each year there must be purchased larger quantities of goods 
for the ensuing season. Thus a business may be in exceedingly 
healthy condition, and yet need considerable assistance from the 
bank at certain times. 



40 • • BANKING SERVICE • • 

Ordinarily during a poor business year most well established 
concerns require less financing, but in some instances such con- 
ditions may necessitate even larger bank credit than is usually 
the case. 

In either of these situations, or whatever the emergency may 
be, the cooperation of a strong banking institution is likely to 
become an important factor in the success of your business. 

The advantages of taking all cash discounts offered are 
now generally recognized by progressive business men. 
The cash discounts which are commonly allowed make it 
profitable to discount all bills, even if to do so it is necessary to 
borrow money from the bank. Short term loans for this purpose 
can be readily arranged if other conditions are acceptable to the 
bank. 

In addition to the saving that can be effected by this prac- 
tice, the enhanced credit standing that is secured by the concern 
known to "discount all its bills" is not to be ignored. 
T . The success of many a business depends to a large 

rp i ai extent upon the efficiency of its Purchasing Department. 

1 ake J± (Wantage , . . n , 

f yr h * * nere are times when it is wise to make unusually heavy 

purchases. Prices may be exceptionally favorable, or a 

marked rise in price may be imminent. Under either condition, 

it may prove profitable to take advantage of the market. 

Sometimes, owing to threatened shortage of supply, it be- 
comes expedient as a measure of protection to buy sufficient 
materials to last for a long period without regard to the price 
that must be paid. 

Again, in the ordinary course of business, there may be 
demands for heavy seasonal purchases. 

In any of these circumstances a loan may be needed to con- 
summate the purchase, and the bank stands ready to take care 
of the needs of its customers in this regard when assured that 
the customer is not over-buying. 



. . BANKING SERVICE • • 41 

Every progressive bank is desirous of aiding its cus- 

• 4-u - i ^ ^ 4-u • u • t-u c ^ Loans to Finance 

tomers in their plans to expand their business. I he first _ 

question to consider in planning any business extension 

is, of course, the matter of finance. Can the enlargement or 

extension be financed out of current funds? Will it be necessary 

to borrow the money temporarily, or is an issue of bonds or 

additional capital stock desirable? It happens not infrequently 

that concerns proceed with plans for the enlargement of their 

business without due consideration of these matters, and in 

many cases it has led to embarrassment. 

Bank officers always stand ready to cooperate with their 

customers to the fullest extent in matters of this kind and are 

glad of an opportunity to talk with them about their plans. 



42 • • BANKING SERVICE 



Member of Federal Reserve System 

BANKERS are frequently asked to explain just what is im- 
plied by the phrase "Member of the Federal Reserve 
System." A technical discussion of the Federal Reserve 
System would be out of place here, but the general principles 
upon which it is based might be summarized as follows: 

The Federal Reserve Bank may be called a bank for banks, 
and has no direct relationship with individuals either as stock- 
holders or depositors. All the stock is owned by banks. All 
national banks are by law, and trust companies may be by option, 
members of this system, subscribing to the capital of the Federal 
Reserve Bank an amount equal to 6% of their capital and sur- 
plus. One-half of this subscription has been paid in by the 
member banks and the balance is subject to call. Without 
impairing in any way the identity of the member banks, the 
Federal Reserve System unites or federates them into a com- 
posite whole, able to render to their communities and to the 
country at large, a financial service quite impossible without 
such cooperation. 

Twelve Federal Reserve Districts 

The United States is divided into twelve Federal Reserve 
districts, each with its own bank, together making up the national 
system. They are located in Boston, New York, Philadelphia, 
Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, 
Kansas City, Dallas, and San Francisco. The Federal Reserve 
Board, under whose general supervision the Federal Reserve 
System operates, has its headquarters in Washington. 



. . BANKING SERVICE • • 43 

A Great Financial Reservoir 

All legal reserves of member banks are kept with the Federal 
Reserve Bank of their respective districts, thus bringing into one 
central reservoir a powerful fund for the common good. In order 
to be most effective, these reservoirs of money must not merely 
exist but also must be mobile, that is, readily available at various 
points, just as the water in a reservoir must be connected by 
pipes to various places where it is needed. 

Through this system, money may be quickly moved from one 
district to another as required, either physically or by means of 
credit. For example, if the Federal Reserve Bank in Dallas is 
in need of funds, it may discount some of its notes in Atlanta, 
or if Atlanta has not the necessary funds, it may re-discount in 
Richmond, and so on, — funds going from the locality where they 
are in abundance to that in which they are scarce. 

Re-discount Feature 

Perhaps that function of the Federal Reserve Bank which 
is most interesting and most important to the individual, is the 
re-discounting of notes of its member banks. 

The member bank, for example, discounts a note for a cus- 
tomer who needs funds in the immediate conduct of his busi- 
ness. The bank, as a member of the Federal Reserve System, 
endorses and may then send this note to the Federal Reserve 
Bank of its district to be re-discounted at a rate which the Board 
of Directors of the local Federal Reserve Bank establishes. 
Should the member bank have an unusual demand for its funds, 
it avails itself of the privilege of re-discounting. It is a source 
of great safety to the member banks to know that as long as 
they make sound loans, conforming in character to the require- 
ments of the Federal Reserve Act, they can readily turn these 
loans into money to meet any demand that may arise. 



44 • • BANKING SERVICE • - 

To be eligible for re-discount with the Federal Re- 

_,. ., .,. serve Bank, a note must conform to some of the following 
Eligibility 

& J requirements : 

First, it must be of short duration, not over 90 days at the 
time of re-discount, except that a limited amount of bills drawn 
for agricultural purposes or based on live stock, may have six 
months' maturity. 

Second, it must arise out of actual commercial transactions. 

Third, it must bear the endorsement of a member bank and 
must be issued for the purpose of trading in or carrying obliga- 
tions of the Federal government. 

Fourth, it must be based on goods in storage or in transit 
represented by the proper documents, such as bills of lading, 
warehouse receipts, etc. 

Briefly, any promissory note or acceptance that represents a 
commercial transaction, may be re-discounted at the Federal 
Reserve Banks. All, however, must be endorsed by the member 
bank. 

Federal Reserve Notes 

The currency issued by the Federal Reserve Banks, known 
as " Federal Reserve Notes," is secured by gold, commercial bills, 
and United States bonds, and the amount issued expands or 
contracts in response to the currency requirements of the busi- 
ness that is being done. The rate established for re-discount- 
ing, therefore, becomes a controlling factor in the expansion of 
credit. When the rate is higher than will permit profitable use 
of the money thus obtained, loans are no longer sought and 
deflation begins. 

Stability of Credit 

Modern business is done on credit. The Federal Reserve 
System has operated to establish stability of credit for legitimate 
needs. A striking example of the effectiveness of the System 



• • BANKING SERVICE - • 45 

was the readiness with which the industries of Rhode Island 
were able to adapt themselves to the productive requirements of 
the war by means of the facilities the Federal Reserve System 
afforded through its member banks. Again, the floating of the 
immense Government war loans and the steady maintenance of 
financial balance during the unusual period following the war are 
manifestations of the beneficent influence of the Federal Reserve 
System upon national business and finance. 



46 • • BANKING SERVICE 



Special Business Service 

THE modern banking institution extends the scope of its 
work far beyond orthodox banking matters, such as accept- 
ing money on deposit, making loans, and discounting notes. 
It offers its customers a wide range of special services along many 
important lines. 

Credit Information 

Manufacturers, merchants, and other customers find the 
bank of great assistance in securing credit information in 
regard to individuals and firms anywhere in this country or 
abroad. 

Frequently one desires to learn more about the financial 
responsibility of one of his customers than he is able to obtain 
through the ordinary channels of his business. In such a case, 
the bank can usually supply the additional information because 
of its relations, direct or indirect, with banks and bankers in all 
the financial centers of the world. 

Information on Trade Conditions 

In the regular course of its business, the commercial bank 
keeps in touch with conditions in practically every line of trade, 
thus accumulating a fund of trade information that can be of 
great value to many of its customers. 

If the banker does not already have the information a cus- 
tomer may desire, he can usually obtain i-t at short notice from 
an authentic source. 



. ■ BANKING SERVICE - - 47 

Drafts 

The commercial bank sells drafts on New York and on all 
other principal cities of the world. It likewise buys foreign 
drafts from its customers at current rates of exchange. 

Transfer of Funds by Telegraph or Cable 

Should customers desire to have funds transmitted more 
rapidly than is possible by postal service, the bank is prepared 
to effect their transfer in this country or abroad, by means of 
telephone, telegraph and cable service. 

On Raising Capital 

Through many years of intimate connection with many busi- 
nesses, the bank officers can render valuable service to those 
entering business and to those already in business, who are con- 
fronted with the perplexing financial problems likely to arise at 
any time in connection with business growth and development. 

Customers desirous of raising capital for new enterprises, or 
of increasing the capitalization of businesses already established, 
will always find it desirable to consult with the officers of their 
bank regarding the best methods to pursue. 

Determining whether to issue bonds or stock, as well as 
deciding upon the various features of the proposed issue, will 
depend both upon the nature and needs of the business and the 
conditions in the security markets where the issues will be offered. 
Experienced bankers can give their customers the benefit of 
valuable experience along these lines. 

On Starting in Business 
Customers intending to start in new lines of business will be 
likely to find it to their advantage to consult with the bank 
officers, who can usually secure for them valuable information 
concerning the particular kind of business proposed. 



48 ; • BANKING SERVICE - • 

Your banker will gladly explain the details of capitalization 
and kindred matters, and be of use in a multitude of other ways. 

On Forming a Business Policy 

Successful businesses are for the most part conducted along 
lines which experience has shown to be best. To know the best 
methods of buying, selling, credit, organization, and manage- 
ment, will often save a young, or even an experienced, manufac- 
turer or merchant much expensive experimenting. The officers 
of the modern progressive bank will be found ready and willing 
to help their customers solve these problems, offering freely the 
benefit of their wide business experience. 



BANKING SERVICE • • 49 



Foreign Department 

THOSE already engaged in exporting and importing, and 
those who are considering making their first entrance into 
international trade, will find the Foreign Department of 
the large city bank or trust company an invaluable aid in 
handling the various financial transactions involved in foreign 
business, and also of great service in many other ways. This 
specialized service can perhaps be best described by taking a 
representative Foreign Department, such as that maintained 
by the Rhode Island Hospital Trust Company. 

To Facilitate Exports and Imports 

The Foreign Department of this Company has the necessary 
facilities for handling the various financial transactions of both 
the exporter and the importer: buying and selling foreign drafts 
(See illustrations — page 73) and bills of exchange, either accom- 
panied by negotiable bills of lading or warehouse receipts; 
arranging for the advancement of funds and guarantees of pay- 
ment for foreign shipments (See illustrations of commercial let- 
ters of credit — pages 55 and 56); and otherwise meeting the 
manifold banking needs of firms engaged in foreign trade. 

The Department is in a position to obtain reliable foreign in- 
formation, to secure valuable data in regard to market conditions, 
to supply information on customs duties and regulations, and to 
assist customers in many other ways in the transaction of their 
foreign business. 

Foreign Currency 

The Department deals in foreign exchange, buying and selling 
foreign bank notes and coin at the prevailing rates. It also 
keeps on hand currency of many countries. 



50 • • BANKING SERVICE - • 

Foreign Trade Opportunities 

In addition to financing foreign transactions, this Department 
is prepared to aid customers in the location and development of 
foreign markets. Its close connection with corporations special- 
izing in the advancement of foreign trade gives it access to valu- 
able information regarding trade opportunities in various 
countries. 

Funds for Travelers 

For individuals traveling in this country or abroad, the 
Foreign Department furnishes both Travelers' Cheques and 
Travelers' Letters of Credit. 

^ 7 , Travelers' Cheques are an ideal combination of con- 

/ ycvupLpt 9 

^,7 venience and safety, providing their holders with readily 

available funds and freeing them from the necessity of 
carrying any large amount of currency. They can be cashed 
anywhere in the civilized world, at banks, hotels, and business 
houses. As they can be cashed, however, only by their owner, 
they afford a thoroughly safe method of carrying funds. Each 
cheque is signed by the owner when he buys it, and is signed again 
when he cashes it, the two signatures thus making the Travelers' 
Cheque self-identifying. (See illustrations — page 76.) The 
Department sells both American Bankers Association (A. B. A.) 
and American Express Company Travelers' Cheques in denomi- 
nations of $10.00, $20.00, $50.00, and $100.00. 

Unused cheques are redeemable upon their presentation. 

, When a traveler is planning to go from place to place 

rave ers ^ an extenc j ec i period and will need a considerable amount 

Letters of Credit of money> a Travelers' Letter of Credit is a convenient 

form of credit instrument.' (See illustrations — pages 74 and 75.) 

It is easily carried and virtually offers the advantage of a 
personal bank account in every city visited. Introducing its 



. . BANKING SERVICE • ■ 51 

holder to bankers of repute everywhere, the instrument can be 
of value as a letter of introduction. Correspondent banks 
may be relied upon at all times to extend every service and 
courtesy in their power to promote the traveler's comfort and 
convenience. 

Many firms that send representatives abroad, have the 
Department furnish them with Letters of Credit to cover their 
foreign expenses, which may range from the purchase of goods 
to the opening of a foreign office. The Letter of Credit intro- 
duces the holder to the foreign correspondents of the bank, 
certifies that he is authorized to draw upon its London, Paris, 
or Rome agents, as the case may be, and requests that his 
drafts be honored. 

The signature of the holder is written at the bottom of the 
letter. The names and addresses of the correspondent banks 
accompany the document. 

Whenever a draft is made abroad, it is signed in the presence 
of a representative of the correspondent by whom it is to be paid, 
and an endorsement is made on the back of the first page of the 
letter, with date, name of the house making payment, place of 
payment, and the amount drawn. 

The Letter of Credit is drawn in either dollars, sterling, or 
francs, or other foreign currency, as the customer may wish. 
Where two or more are traveling together the instrument may 
be made payable to more than one person, thus enabling the 
one who finds it most convenient to attend to the matter of 
procuring funds. 

Any undrawn funds may be redeemed upon return of the 
letter to the bank. 

Miscellaneous Services 

Business messages from abroad are generally cabled in cipher, 
which must be deciphered by one familiar with the codes. The 



52 • • BANKING SERVICE • - 

Foreign Department can furnish six different codes: Bentley's, 
Lieber's, A. B. C. Fifth Edition Improved, Western Union 
Universal, Western Union Five-letter Edition, and Commercial 
Telegraph and Cable Code, together with the International 
Cable Register. Any assistance needed in deciphering is freely 
given. 

Letters written from abroad often need careful translation. 
Also, translations into various foreign languages are occasionally 
necessary. The Foreign Department can furnish reliable trans- 
lators for all languages in which business is likely to be transacted. 

Many individuals are desirous of placing funds on deposit 
abroad, which will enable them to take advantage of current low 
exchange against the time of a proposed future trip. A foreign 
bank account can be easily opened and controlled from this 
country. The person interested in making such a deposit may 
secure from the Foreign Department any desired information on 
banks carrying savings accounts, variation in interest rates, and 
the taxes that are levied by some countries on interest earnings. 

The officers of the Department gladly assist travelers in 
obtaining their passports and making other arrangements for 
their foreign trips. 



BANKING SERVICE 



53 



yif; . ■/./ "v-TT" ■** ~-^ ■-/ 



~m 



wea/mm £M£ 



'£ St. s/422. 







, ft/Mf •y///S>f/f'rJ)/rt//f/':W{0/;/M 



tf 



vO** 






/^VKTZC^ i 'd. 'fcu 



ZSl&JbUArO**^ 



Endorsed note. See explanation — page 32. 




^±&ki#L J&U, C&* gjwgaw ^,.^ - -; ei- &MH 



Qfo '& . ®ue^^lS!iL 



Endorsed note, made payable to endorser. See explanation — page 32. 






G. 



U>c«,< 



s?n>^ ^cti,fc^c 









%>a*U 3. £0a*<^ £ s * & 




>4£L 



1L 



7t* odligntten efMe accepter Atrea/'c 
in tie Ifrated Slates wMd />e marde^/tiale 



cfffaxts /mm tie cfraHtr 77i* ■t&aH-et may aaapt Mis AtUpayaUe at anr&ani>, ianier »r fru&t company 



?4ccqptecl -at 






■//;f m/<#»»"- 



Trade'acceptance. See explanation — page 57. 



54 



BANKING SERVICE 






Providence, 



>ay to the orderygf VJ , (\& 1 ~f ?f "ft *^" t \^ — 



a /„ Aay X<4 19i /, ,/0 tao£r 



After 



■i*^ 



for value receiTgeCT*an<&jfpa$gC^«* ^ajnidfo^couri^ of 

payable at the Federa%, Re^brveJ^ank^f^d^p s*-^. jS~*S SI 



Rhode Island Hospital Trust Company 
Providence, R. I. 5733 



Bank acceptance. See explanation — page 58. 






►WfS 



u 
^ 

^ 



y^ 



^c /a; 



C\ 



\wufatm £&.jf.^ ^C^WMA 



Soo 



00 

700 



j5&i*e, JZ^tTu<&a*uz, _~^L_ *--- _ : ... *2lm 




^/W/M-dzftftigPied' 




ZkMeb^ 




Certificate of deposit. See explanation— page 25. 



BANKING SERVICE 



55 



No.L 4321 

The Hemp & Burlap Export Company, Limited, 
Calcutta, India. 



.^*_21 



jz/>___?out. months sight -._-_- 



J&J&XXVHt^f^rf&JbS^ - 

y^^^^^i^^S^^ _ 

J^Mj&S&^'^f^ =_»_» X]uir.^^j^inaur.an.ce...&...freigbi^ 

i^&a&9^«&£^-'v&^^^ _ 

Providence, Rhode Island. 

? and to be drawn 




for one hundred (lOO) bales of Gunnies . 



jfo^*s$&%k&. Apri 1__ 21 T . .._ VM.2X 

,^>_^5,000_,_..Stg,-..-. 



/ d^/^/^J^-Mi^t 



^^z^j^t^coz-ei/Jb- Brown Brothers & Co., 
New York and advice of drafts when 
drawi. The marine insurance, including 
the war risk is to "be effected by you and 
policies are to accompany your drafts. 




'^^~r^Z%& / (^) 



^^^ 



Import letter of credit. See "Foreign Department"— page 49. 



56 • • BANKING SERVICE 



New York, April 21, ....1921- - - ...- 

.^€.±25-4 

Jfe s s.r &,._ Produce . Bxpar %. . Company ,. Limit ed, ..Hong _ Kong.,. . China* 

y as*& .Ninety-days., .sight....**.. .•» . « = - - - — 

^^^^^^%«^^r^Pro.yi4erlce ..Import-Company, Providence,-. .R I—.- -.. 

v**^i^2!^^Y%s^ States 

..l?ll?r.?..- - .-_ Jfc- .ninety, percent. „...., jx*^.. .and. freight. _ s& 

^Zeitw*a>Kd£je/& ^dAt/^etft ^.„ Providence., ...JU-JU :..... :._ 



^Jfri^4%^s^ and to be 
drawn .for ...one. ..hundred (lQQ.).. tons.. Chinese.. Shelled Peanuts, _.._crop 1921 



_ three - . .-....- _ s???*m/i£^ 

t ^^ ; 10.,QQQ.....n...S.»...r: * 

~ 'U^....- -.125.4 T< ^fe^_.JKew York, 

v^*j^^./wd^cw#b^ Brown Brothers & Co., New York. The marine 
insurance, including the war risk, is to be effected in Providence by 
the Providence Import Company. 



Export letter of credit. See "Foreign Department" — page 49. 




BANKING SERVICE • • 57 



Acceptances 

A N acceptance is nothing more than an "accepted" draft. 
/\ If the latter is understood as to its underlying principles, 
-*- * the acceptance, which grows out of it, will be easy to 
understand. 

A draft is an order in writing, addressed by one party to 
another, signed by the drawer, requiring the one to whom it is 
addressed to pay on demand or at a fixed or determinable future 
time a certain sum of money, to the order of a specified party, 
or to the bearer. As commonly used, the draft is accompanied 
by evidence of a shipment of goods, and requires the buyer either 
to pay for the goods or to execute a promise to pay by "accepting" 
the bill before possession of the goods may be obtained. 

In the procedure of accepting, the word "accepted" is written 
across the face of the draft, and the date, place of payment, and 
signature of the acceptor are written below. 

The Trade Acceptance 

The trade acceptance is an accepted draft arising out of the 
sale of goods, and drawn by the seller on the buyer. The buyer's 
acceptance is his acknowledgment that the purchase has been 
consummated, that he is satisfied with the terms of the draft, and 
that he purposes to meet the obligation at its maturity. As 
commonly used, the trade acceptance bears a statement on its 
face to the effect that it represents an actual sale of goods to the 
acceptor by the drawer. (See illustration — page 53.) 

The trade acceptance thus is used only in transactions that 
concern the purchase and sale of goods, and should not be given 



58 • • BANKING SERVICE ■ • 

for borrowed money or past due accounts. Although trade 
acceptances that differ in style or wording may be discounted 
by banks, trust companies, and banking houses at their dis- 
cretion, yet to be eligible for re-discount by Federal Reserve 
Banks, or for purchase by them in the open market, trade accept- 
ances must comply with certain rules set forth by the Federal 
Reserve Board. It must represent a current transaction. It 
cannot be made to cover professional services, commissions, sales 
of stocks or bonds (except bonds or notes of the Government 
of the United States), or any debts not incurred through the 
purchase of goods by the drawer. At maturity the trade accept- 
ance must be met with cash payment, not being subject to re- 
newal. It is used most frequently in domestic transactions. 

. . Upon receipt of a trade acceptance, the seller can 

_ ° endorse the instrument and discount it at his bank, as 

he would discount a note (See page 38), thus procuring 

^ for immediate use the capital which would otherwise be 

tied up in book accounts. 

The many advantages in the use of the trade acceptance are 
resulting in its general adoption in commercial circles, by both 
large and small businesses. 

The officers of the bank are glad to discuss the trade accept- 
ance with customers who are interested, suggesting how it may 
be used to advantage in their various lines of business. 

The Bank Acceptance 

The bank acceptance differs from the trade acceptance in that 
the acceptor is a bank instead of a merchant. (See illustration — 
page 54.) As the bank is of known financial strength, acceptance 
of the instrument by a bank naturally tends to increase the ele- 
ment of confidence in the transaction, indicating, as it does, the 
willingness of the bank to lend its credit in connection therewith. 



• . BANKING SERVICE • . 59 

A bank acceptance, in the financial responsibility behind it, 
is like a certified check. 

A Trust Company is empowered to accept drafts arising out 
of transactions involving the importation and exportation of 
goods, or out of transactions involving the domestic shipment of 
goods. It may accept drafts secured by readily marketable 
staples in storage, or drawn for the purpose of furnishing dollar 
exchange. Specific information relative to the use of accept- 
ances in the financing of imports and exports may be had from 
the Foreign Department of this Company. 



60 • • BANKING SERVICE 



Investment and Statistical 
Department 

THE Investment and Statistical Department of the Rhode 
Island Hospital Trust Company is prepared to secure any 
desired information on matters related to investments. 
It can furnish the latest quotations on listed or unlisted securities, 
giving interest and dividend dates, past dividend records, earn- 
ings statements, and kindred details concerning which security 
holders should be thoroughly informed. 

Investments 

With hundreds of millions of dollars' worth of unknown 
securities constantly on the market, investments require the most 
careful judgment. An investment that might be excellent for a 
business man, might not be at all adapted to the needs of a 
professional man, or absolutely unwise for a woman wholly de- 
pendent on the income from her investments. 

While a person ordinarily goes to a lawyer for legal advice, 
and to a doctor for medical advice, yet too often the investor 
relies absolutely on his personal judgment, meagre as may be 
his investment experience. 

The officers in this Department will be glad to give any cus- 
tomer the benefit of their long experience in investment matters, 
and to secure whatever information may be desired concerning 
specific securities, helping him in every possible way to find the 
investment, or investments, best adapted to his particular re- 
quirements. 



• • BANKING SERVICE - • 61 

A vast amount of money is thrown away annually in 

, , , ,. .,, ... ^i . Investments 

hazardous speculations in worthless securities. 1 his OT _ T 7 _ _ , 

, i ., i , . r j ,i Should be Made 

money could easily be saved if men and women would . , , 

i f.i. xi. • u i • ii ■ Cautiously and 

only consult their bankers in all investment matters. _ ,_. ■% 

Intelligently 
Hundreds of instances are available to illustrate the 

little care taken by thousands of supposedly competent men and 
women in making investments. A typical instance is that of a 
young woman who was recently solicited by a salesman, whom 
she knew but slightly, to invest in the stock of a new company. 
The salesman painted the prospects of the company in roseate 
hues, and told the young woman that she ought to buy the stock 
on the spot, as it was the last day on which she could purchase 
except at a great advance in price. Instead of consulting her 
banker, she simply accepted the salesman's word. Not having 
enough ready cash to pay for the amount of stock she was per- 
suaded to take, she made up the remainder in Liberty Bonds. 
Of course, the customer would not have bought a piece of wearing 
apparel with so little consideration. Within as short a time as 
two weeks, the new corporation was in bankruptcy, with prac- 
tically a total loss to the stockholders. Its condition had been 
common knowledge in banking and business circles for some time, 
and if the young woman had asked any banker about this stock, 
she would have learned that it was a perilous speculation. 



62 • • BANKING SERVICE 



Mortgage and Real Estate 
Department 

WHEN a large Trust Company lends money secured by 
a mortgage on improved real estate, the transaction 
involves certain details that have come to be a matter 
of common practice. Briefly, the procedure is as follows: 

First the applicant for a mortgage loan gives the Trust 
Company certain information that is required in the case of all 
mortgage transactions, viz., whether the loan is desired for the 
purpose of buying new property, for improving property now in 
the possession of the applicant, or for purposes not directly con- 
nected with the property to be mortgaged. 

Next the applicant furnishes a complete description of the 
property by filling out a regular application form. This de- 
scription includes: location, dimensions of lot, style of building, 
materials of roof and walls, and age of structure, as well as 
enumeration of the various interior appointments and con- 
veniences. The application includes a description of the im- 
provements and development of the street upon which the 
property is located, and all essential facts regarding the valuation 
of the property, such as tax value of lands and buildings, owner's 
value, amount of insurance carried, and income from rentals. 

Upon the filing of this application, the property is examined 
and appraised, the appraisal being based upon the condition of 
building and street, character of adjacent property, and prospects 
of the locality. 

After the application has been passed and the evidence of a 
clear title has been furnished, the loan is made, the Mortgage 
Department handling all details incident to the transaction. 



• • BANKING SERVICE • • 63 

Property on which a Trust Company holds a mortgage is 
inspected annually to ascertain that it is kept in good repair and 
properly insured, that property values in the neighborhood are 
not declining, and that in every respect the loan is kept as safely 
secured as at the time it was made. 

It is usually part of the agreement between the Trust Com- 
pany and the mortgagee that a definite amount be paid annually 
to reduce the loan. 

While mortgages are taken by Trust Companies on nearly 
all classes of approved real estate under proper conditions, yet 
naturally the majority of these mortgages are secured by good 
residential property on account of its stability of value and ready 
salability. Good mortgages being considered a conservative, 
sound form of investment, they are utilized by Trust Companies 
for the investment of a portion of both their savings and trust 
funds. 

While mortgage and real estate transactions are an p , 

important part of the business of the Rhode Island ,, 

u 'iit 4.r *. 4-t.- r- - *. - Management 

Hospital I rust Company, yet this Company is not in any & 

sense a real estate agent. It does not buy or sell real estate. 

It does, however, manage the real properties embraced in 
trust estates served by the Trust Company as trustee. When 
the Company takes charge of a property under these conditions, 
it adjusts and collects rents; maintains adequate insurance; pays 
off mortgages; pays taxes, water bills, and similar items; also 
makes necessary and advisable improvements and repairs, taking 
care of each detail with a view to serving the best interests of 
the estate. Where disposal of the property is advisable, the 
Company arranges and consummates the sale. 

To secure to one's estate the experience of the Trust Com- 
pany in the management of real estate is one of the important 
advantages in naming it as trustee. This experience embraces 
all the details and responsibilities of the individual property 
owner, and many others peculiar to the highly specialized service 
the corporate trustee is constantly called upon to render. 



64 . • BANKING SERVICE 



N 



Trust Department 

O department of the modern bank embraces a wider 
or more useful range of services than that of the Trust 
Department, nor are there many individuals or corpora- 
tions that cannot utilize some forms of this service to good ad- 
vantage. 

Trust Service for Corporations 

For industrial and public service corporations, and also for 
incorporated institutions and societies, the Trust Department 
has the necessary facilities for rendering various services of a 
specialized and technical character. 

For corporations of all kinds, it is prepared to act as Registrar 
of Stock and Bond Issues and as Transfer Agent of Stocks and 
Registered Bonds. 
. . Since these details are highly technical and are care- 

* fully circumscribed by law, it is of unquestioned advan- 

. . tage to corporations to have them taken care of by an 

n j T organization which makes a special business of maintain- 

ing familiarity with all registration and transfer require- 
ments, and which has particular facilities for rendering this type 
of service. 

The Trust Department is also prepared to handle the regis- 
tration and certification of town notes and all kinds of municipal 
securities. 

_ The Trust Department serves as transfer agent for the 

Transfer of . , t - . - 

J ^ stock of various corporations. 

The stock certificate is personal property, whose owner- 
ship may pass from one person to another. In order for the new 



• • BANKING SERVICE • • 65 

owner to be recognized as a stockholder, a transfer must be 
effected on the books of the corporation, the old certificate 
canceled, and a new one issued. 

As transfer agent, the Rhode Island Hospital Trust Com- 
pany, through its Trust Department, offers a long and diversi- 
fied experience in this technical field, which assures protection to 
both the old and new stockholders and the corporation as well. 

Corporations find Trust Company transfer service highly 
satisfactory, and generally less expensive than undertaking to 
transfer their own stock, which would require the constant 
employment of one or more specially trained experts by each 
corporation. 

When a Trust Company acts as Trustee for Bond _ 

Issues, a mortgage is made under which the Trust „ _ 

^ . jo- t u for Bond Issues 

Company is named as lrustee. In such a transaction J 

the borrowers vest the trustee with title to property for the 

benefit of security-holders. The property involved may consist 

of securities, real estate, or equipment, or it may be in other 

forms. If the pledged assets consist of securities, the mortgage 

is called a ' 'collateral trust." 

The securities pledged are put in negotiable form or registered 
in the name of the trustee, whose duty it is to carry out all pro- 
visions of the mortgage. If substitutions are permitted, the 
trustee sees to it that the security is preserved by substitutions 
of collateral of equal or greater value. 

Collateral trust mortgages usually provide that the borrowing 
corporation shall maintain a certain margin of collateral. In 
the interests of security holders, the trustee, if occasion requires, 
calls attention to this requirement. 

In the case of mortgages other than collateral trusts, the 
borrowing corporation retains possession of the property pledged, 
so long as it complies with the terms of the trust. In case of 



66 • • BANKING SERVICE - • 

default under either type of trust, however, it becomes the duty 
of the trustee to act in the interests of the security- holder in 
such manner as the mortgage may direct. 

In acting as Trustee for bond issues, the Trust Company takes 
custody of the bonds, and makes delivery after having certified 
on each bond that it has been issued in accordance with the terms 
of the mortgage and is one of the series of bonds described in 
the indenture referred to in the bond. The procedure of delivery 
varies, of course, with the particular issue. In some cases the 
entire issue is to be delivered at the time the mortgage is executed. 
Again, deliveries are sometimes made in instalments, either 
periodically or when stated requirements have been complied 
with. The terms of the mortgage may provide that prior bonds 
be retired out of the proceeds of the pending issue. 

The Trustee receives the interest on the mortgage from the 
corporation as it comes due, remits interest directly to owners 
of registered bonds, and pays coupons presented by holders 
of coupon bonds. 

The Trustee acts under the sinking fund provisions of the 
mortgage, if any exist. The proper amount must be set aside 
and disposition made of the fund. The mortgage may provide 
for retirement of a part of the issue by annual drawings, or may 
permit the retirement of a part of the issue at the option of the 
issuing corporation, in which case the Trustee arranges the draw- 
ings by lot and publishes the numbers called. In other cases the 
Trustee invests the sinking fund instalment in interest-bearing 
securities for the benefit of the security- holders, or it may pur- 
chase a portion of the issue in the open market. 

The final duty of the Trustee for bond issues is to attend to 
the details of releasing the security to the borrower upon the 
retirement of the issue. Under certain trusts and liens, it is 
generally required that the borrowing corporation retire a 



. . BANKING SERVICE - - 67 

portion of the issue from current earnings each year. Other 
mortgages require that the bonds be retired serially. When 
bonds are paid off, the release of the lien is recorded in the 
various places where the mortgage is on record, and the retired 
bonds are canceled and destroyed. 

As Fiscal Agent for Corporations, the Trust Company ^. , . 
takes care of the details involved in the payment of f ~ . 

interest and dividends on securities issued by these 
corporations. 

The arrangements between the corporation and its fiscal 
agent vary with each individual case. Sometimes the funds 
required for making the payments are deposited with the Trust 
Company in a special account. In other cases the corporation 
may provide funds by authorizing the Trust Company to charge 
payments of matured bonds and coupons to its regular deposit 
account or to the account of some other bank or organization 
with which it has made previous arrangements. 

When asked to make payments arising out of an issue of 
bonds, the Trust Company obtains a specimen of the bond and 
coupons or a detailed description of them, together with speci- 
mens of the signatures appearing thereon. This information is 
used in passing upon the validity of bonds and coupons presented 
for payment. 

The arrangement with regard to income tax returns and 
deductions required by the Federal Law is an important point 
to be settled prior to establishing fiscal agency relations between 
Trust Company and corporation. Some concerns attend to this 
work themselves, while others delegate the matter to the Trust 
Company. In the latter case the Trust Company requires the 
corporation to furnish a letter of indemnity protecting it against 
any claim that the Federal Government may make against it by 
reason of its making unavoidable errors. 



68 • • BANKING SERVICE • • 

„ ... The Trust Company is also prepared to attend to the 

many important financial matters involved in the re- 
organization of corporations, acting as depositary for cash and 
securities belonging to such corporations, and exchanging new 
issues of stocks and bonds for the old issues. 

Business transactions often require an escrow, i. e., 
the placing of an instrument or securities in the hands of 
a third party for delivery upon performance of certain conditions 
previously agreed upon by the contracting parties. 

One of the most important considerations to the contracting 
parties in an escrow agreement is the selection of the proper 
custodian to hold their documents. 

To permit either party to hold the papers would be unwise 
and unbusinesslike. Merely placing them in a safe deposit box 
to be opened only in the presence of both parties is inconven- 
ient, and perhaps may be embarrassing. 

In the arrangement there are often opportunities for misun- 
derstanding which may cause disagreement. There are many 
details involved which may be improperly handled by one un- 
familiar with them. 

It is, therefore, essential that the contract, or other instru- 
ment, be entrusted to a third party, not merely to be held in 
safekeeping, but to insure the proper fulfillment of the conditions. 
This third party should be entirely disinterested and impartial. 

The Trust Department of the Rhode Island Hospital Trust 
Company offers exceptional facilities for escrow service. Its 
long experience in handling transactions involving many different 
documents, such as deeds, abstracts, mortgages, assignments, 
etc., is found valuable by anyone who requires this particular 
form of service. 

. A The Trust Department regularly acts as agent for 

* corporate institutions or their treasurers. This service is 

described in detail under 'Trust Service for Individuals," page 69. 



. • BANKING SERVICE • • 69 

Trust Service for Individuals 

The Trust Department is prepared to serve individuals in 
any fiduciary capacity, such as Executor and Trustee under will, 
Administrator under court appointment where there is no will, 
Guardian for minors, Conservator for persons who are not able 
to manage their own estates, and as Agent for those who wish 
to be relieved of the responsibilities of property management. 

In the handling of estate business and in rendering the . _ , _ 

,1 . , , ,1 rj. Advantages of the 

various other trust services mentioned above, the I rust r 

Company brings to its duties all the facilities and special- * * 

ized skill of a large organization engaged daily in this particular 

form of business. 

In the Trust Company one finds an executor and trustee of 

known financial responsibility. Under the laws of Rhode Island 

a deposit with the State Treasurer of a very substantial amount 

of securities (an amount equal to 20% of the capital of the trust 

company) is required as a guarantee of the faithful performance 

of all duties and responsibilities assumed. 

The Trust Company's continued existence as a corporation 
assures the will maker that if he chooses it as executor and trustee, 
it will be living and competent to act whenever its services may 
be required. An individual is liable to accident, illness, death, 
or what may be still worse for the estate — failing mental powers. 
Furthermore, he may be frequently absent on business or pleas- 
ure at times when the affairs of the estate suddenly require im- 
mediate attention. If you should select as an executor and 
trustee an individual of about your own age, it would be only 
an even chance that he would outlive you, and if he did, his 
ability to carry out your plans might be impaired by his advanc- 
ing age or declining strength. 

The Trust Company offers an accumulated experience which 
redounds to the benefit of every estate in its hands. The officers 



70 • • BANKING SERVICE - • 

of the Company, in the regular course of their duties, are con- 
stantly apprised of conditions in the investment market, a knowl- 
edge which is of great value in the handling of securities. Made 
up, as it is, of directors and officers familiar with practically 
every kind of business, the Trust Company brings to each prob- 
lem a composite financial judgment less liable to be in error than 
that of the individual. 

The corporate executor and trustee maintains an impartial 
viewpoint, uninfluenced by any possible family differences of 
opinion, holding its duty to be the proper execution of the plain 
directions in the will, and the protection of the interests of 
beneficiaries. It is the policy of the Rhode Island Hospital 
Trust Company to uphold persistently the terms of a will or 
trust instrument, with the administration of which the Company 
has been entrusted, and even to defend that instrument before 
the courts if necessary. 

Whatever fiduciary service one may wish performed, he will 
find that the most satisfactory course is to place the matter in 
the specialized hands of the Trust Department of a strong, con- 
servative Trust Company. 

A ? Fxpr t ^ n executor 's duties may be divided into three classes. 

First come the probate of the will, advertising for claims, 
making an inventory and appraisal of the estate, the determi- 
nation of income and inheritance taxes, etc. Attorneys in charge 
of the legal matters incident to estate settlement always find the 
facilities and cooperation of the Trust Company especially use- 
ful in the consummation of their business. 

Next come such duties as the sale of securities and real 
estate, the disposition of the testator's business affairs, partner- 
ship settlements, passing upon duties and claims, and similar 
matters requiring careful and experienced judgment. 

Finally there is the active management of the estate, involv- 
ing the proper protection and conservation of all assets ; personal 



. - BANKING SERVICE ■ ■ 71 

study of the character of these assets, so that they may be han- 
dled to the best advantage of the estate; estate accounting, fre- 
quently demanding expert and technical knowledge; compiling 
and filing of tax returns; and the making of proper reports and 
rendering the final accounting to the court. 

From the foregoing it will readily be seen that the selection 
of an executor is a matter of great importance, calling for sound 
business judgment rather than mere sentiment. 

In almost every case, a practical consideration of the essen- 
tial qualifications of an executor will lead to the appointment of 
the Trust Company, for reasons so obvious that they are prac- 
tically axiomatic. The Rhode Island Hospital Trust Company's 
experience in the administration of estates extends back over a 
half century; its corporate existence is unaffected by the un- 
certainties of life. 

Furthermore, this Company is glad to establish with the 
testator during his lifetime such intimate contact that it may be- 
come entirely familiar with his personal desires and with the 
nature and extent of the duties which it is to perform, thus 
avoiding delays, guesswork, or loss in handling the estate. 

When the maker of a will desires to have as his executor 
some member of his family or some intimate friend, be- 
cause of such a one's intimacy with his affairs, and at the same 
time provide his estate with the benefits of the more advan- 
tageous administration of the Trust Company, he may name the 
individual and the Trust Company as co-executors. 

As Co-executor the Trust Company brings to the aid of its 
colleagues the wide experience and technical facilities that are 
often indispensable to the proper handling of certain kinds of 
business, or the liquidation of assets of an unusual nature. 

Where a man or woman dies without making a will, . ., . . 
the Trust Company is prepared to accept appointment by 5 tms 

the court as administrator, distributing the estate in accordance 
with the laws of the state. 



As Co-executor 



72 • ■ BANKING SERVICE • • 

It also serves as "administrator with will annexed,' ' to suc- 
ceed an executor who may die or resign before completing the 
settlement of an estate, consummating the settlement in ac- 
cordance with the terms of the will. 

A trust under a will is created by providing in the will 
that a certain amount of money, securities, or other per- 
sonal or real property, be placed in the hands of a trustee 
by whom the property is to be held and used as the maker of the 
will may specify. The title to such property remains in the 
trustee as such until the termination of the trust. 

A trust is, undoubtedly, the surest and safest method for 
providing for the future welfare of dependents or to insure the 
carrying out of any project in which a man may be interested. 

As a trust has no fixed form, it can be adapted to the carrying 
out of any purpose, so long as it is in conformity with the law. 

A typical illustration of the use of trusts was contained in the 
will of Mr. S., who at his death left a widow and young son and 
daughter. 

A trust was arranged for Mrs. S. to give her a good income for 
life. Under the terms of the trust, various securities were left with 
the trustee in such a way that Mrs. S. could dispose of the principal 
of the trust fund in her will as she saw fit. The trust relieved her 
entirely of financial burdens, so that she could give undivided 
attention to the care of her children and to other interests. 

The trust for the son, who was only twelve at his father's 
death, provided that as much of the income as was necessary should 
be used for his maintenance and education, the remainder of the 
accumulated income being paid to him when he came of age, from 
which time he would receive the income as it was earned. 

None of the principal of the trust fund, however, was to be 
paid to him until he was twenty-five, and then only under certain 
conditions. If he had entered a profession or was established in 
business he was to have a third of it, the other two- thirds to be 
turned over to him when he was thirty. 



BANKING SERVICE 



73 



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BANKING SERVICE 



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76 



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■ . BANKING SERVICE - - 77 

By these provisions his inheritance would be kept intact for 
him until his judgment was mature and he had time to acquire 
considerable business experience. 

For the daughter the arrangements were similar. None of 
the principal of the trust created for her was to be paid over until 
she was thirty, unless she married before she reached that 
age. In any case, only one-half of the principal was to be given 
to her outright, the other half being held in trust throughout her 
life, giving her the right to dispose of it in her will. 

In this manner Mr. S. thoroughly protected his family from 
financial adversity, and prevented the possible dissipation of his 
estate through the financial inexperience of his wife or children, 
safeguarding them from the advice of injudicious friends as well 
as against the schemes of the unscrupulous. 

This is merely an example. There are innumerable ways in 
which a trust can be made to safeguard relatives or other depend- 
ents, or enterprises in which you may be interested. 

Whether or not the Trust Company is named as 
executor in a will, it is empowered to serve as trustee of 
any trusts that may be created in the will. 

While many of the qualifications that a trustee should possess 
are the same as those required for the work of an executor, the 
continuous existence of the Company as a corporate institution 
is of even greater importance when it serves as trustee, as most 
trusts run for a long term of years. 

For those who desire during their lifetime to arrange 
their affairs in such a way as to make suitable provision . *^ 

for themselves or their relatives, or for any other purpose, ^ 

and at the same time to free themselves from the business details 
incident to the accomplishment of this purpose, the voluntary 
trust (also called the "trust under deed" and the "living trust"), 
offers a most satisfactory plan. 

The plan of the voluntary trust may be explained briefly as 
turning over all or part of one's property to the Trust Company, 



78 • • BANKING SERVICE - • 

as trustee, to be handled in such manner as may be specified by 
written deed. 

The main point of difference between a voluntary trust and 
a trust established under a will, is that the voluntary trust be- 
comes operative at once, or at least at a certain stated time, 
whereas a trust created by will comes into existence only upon 
the death of the maker of the will. 

The property involved in the voluntary trust is held by the 
trustee during the period of the existence of the trust. Funds 
are invested and reinvested as occasion arises. Income is col- 
lected and paid to the proper beneficiaries. Upon the fulfillment 
of the conditions named in the deed, the trust is terminated, and 
the property distributed in accordance with the provisions in the 
trust instrument. 

This type of trust may be either revocable or irrevocable. 
If the trust is made revocable, the maker reserves the right to 
revoke or annul his trust deed and resume possession of his 
property, or modify the provisions of his trust. But if the trust 
is made irrevocable, the property is deeded to the trustee without 
power to recall. 

The voluntary trust permits of almost unlimited variation in 
plan, according to the wishes of the maker. A few of the rep- 
resentative objects accomplished by the creation of voluntary 
trusts are: to provide for income payable to the maker during 
his lifetime and to certain beneficiaries after his death ; to provide 
for the support of infant children, or of a wife during her life; to 
provide for the education of an individual; to provide funds 
for the furtherance of charity; to satisfy financial clauses in 
divorce or separation agreements; to collect and dispose of life 
insurance. 

Through a voluntary trust, a man may, at a time of personal 
prosperity, provide for his dependents and thus free himself for 
all time from any anxiety as to their future. 



• • BANKING SERVICE • • 79 

In effect, a trust under deed supplements, or in some cases 
even takes the place of, a will in disposing of an individual's 
property, according to whether he places all or only a portion 
of it in trust. 

A few years ago one of the customers of the Rhode Island 
Hospital Trust Company decided that he would like to make 
arrangements for the division of his property among his wife and 
his three children. He preferred to do this during his lifetime so 
that they would all know what was being done, and so that they 
would be spared the delay necessarily incident to the administration 
of an estate. 

Accordingly, he established four trusts under deed, one for his 
wife, and one for each of his three children, dividing his property, 
which was largely in the form of securities, among these four 
accounts. 

As he was retired from business and was placing the bulk 
of his property in these accounts, he directed that the income 
should be paid to him during his lifetime. 

Some time after these trusts were created his wife died, and 
the maker of the trust then exercised his power of revocation, 
which he had retained in the trust instrument providing for her, 
and divided the property of that trust among the three remaining 
trusts. 

Recently the maker of the trusts died, and in each of the 
remaining trust deeds was a clause providing that any income 
from the trust undrawn at the time of the maker's death should be 
added to the principal, and the resulting total administered accord- 
ing to the provisions of the deed. 

By the provisions of the deeds the children will receive the 
income from their trusts in quarterly installments during their 
lifetime. At their death the property will be disposed of accord- 
ing to the provisions of the various instruments. 

In the case just cited, the voluntary trusts were made to 
include all the provisions which the maker would have incorpo- 
rated in a will. 



80 . ■ BANKING SERVICE * ■ 

It is obvious that the voluntary trust is exceedingly elastic, 
and can be made to fulfill almost any conceivable purpose. As 
the drafting of such a trust agreement must be in accordance 
with the laws of the state which will have jurisdiction over it, 
and as it is in any case a highly technical instrument, persons 
intending to create such a trust should by all means enlist the 
services of competent legal counsel. 

Individual circumstances and purposes must govern the plan 
of the voluntary trust. An ideal arrangement for one individual 
might be entirely unsuitable for another. Thus, no specific 
recommendation can be made to an individual without personal 
consultation and conference. But as a plan providing for one's 
dependents, and the delegation of burdensome details to an 
organization specially established and equipped to perform such 
service, a voluntary trust instantly commends itself. 

The Trust Officers are always glad to explain this service to 
anyone who may be interested, and to assist him or her in the 
formation of that particular plan which will best meet require- 
ments. 
_ _. Property coming to a minor child in his or her own 

name requires the appointment of a guardian if the han- 
dling of the property involves any business relations with other 
persons. 

It may be generally considered that receipts, contracts, or 
other obligations made by a minor child are not binding, and 
therefore the child must be represented by a properly appointed 
guardian. 

An individual acting as guardian, even if that individual hap- 
pens to be one of the parents of the child, is required by law to give 
a bond. A bond of a surety company, however, is not required 
when the Trust Company acts as guardian, and its appointment 
not only obviates the expense of surety on bond but relieves the 



• • BANKING SERVICE - • 81 

parents of all the details and technicalities of the work, besides 
assuring safe and efficient handling of the child's property. 

Thus, if a child, one or both of whose parents are living, 
inherits property from some other relative, it will be wise to con- 
sider the advantages of having the Trust Company named as 
guardian. 

The services of the Trust Department are available . _ 

f ,, r . j. .1 , i c As Conservator 

as conservator for the property of individuals who lor 

various reasons lack the personal qualifications or capacity for 
property management. Under the active management of the 
Trust Company, such property is handled efficiently and eco- 
nomically, and protected from loss. 

One of the special services that the Trust Department 

of the Rhode Island Hospital Trust Company renders is *\ •; 

,, i , jr r ii i • j r ... security Owners 

the care and handling of all kinds of securities. J 

Bonds, stocks, and interest-bearing securities of any sort, may 
be deposited with the Trust Department, relieving the owner of 
all details of management without minimizing in any way the 
owner's personal control. 

All securities deserve and require close, constant attention, 
if the owner is to be secured from loss or annoyance. The 
maturities of coupons and principal of bonds, mortgages, and 
other securities, must be looked after, and interest and dividends 
collected promptly or their non-payment given immediate con- 
sideration. Holders of an original issue of securities are very 
often granted the right to subscribe to later issues, and some- 
times are permitted to exchange their holdings for different 
obligations of the same company. 

Whatever value attaches to these various privileges must be 
exercised by specific dates. Should the owner not care to avail 
himself of these privileges, he can usually dispose of them, as 
1 'rights," to good advantage. 



82 • • BANKING SERVICE - • 

Very often provision is made for calling bonds or other 
obligations for payment at a time prior to their maturity. Such 
a call should be known immediately, in order that the securities 
may be presented, for they yield no interest after the date set 
in the calls for advance payment. 

Obviously, deliveries to complete sales, pledges, or transfers, 
consume a certain amount of time. Should the owner be absent 
on business or vacation, or through illness, the inaccessibility of 
his securities may cause great inconvenience or costly delay. 

The Trust Company receives securities under a deposit 
agreement, and holds them in safe-keeping. At the proper time 
the coupons on bonds are cut and forwarded for collection. Divi- 
dends on stocks are collected when the Company has been so 
authorized. Payments of interest and principal on notes and 
mortgages are received and endorsed. 

Collections of savings bank interest and any other items, 
including principal which may become due, are attended to 
promptly. 

Such collections are paid over to the owner of the securities 
as he may designate, or, if preferable, are transferred to his call 
account at stated intervals, at which time statements of all 
receipts and expenses are made. Coupon and bond ownership 
certificates, required by the government in connection with 
Federal Income Tax returns, are furnished and filled out for the 
customer. 

At the end of the year the customer is furnished with a report 
of the income collected during the year, in proper form for use 
in making out his income tax returns. 

Though this particular type of service does not include the 
assumption of responsibility for the investment of funds entrusted 
to its care, yet the Company is always glad to give customers the 
benefits of its Statistical Department and advise them in the 



• • BANKING SERVICE • • 83 

matter of investments. The Company does, however, inform 
the customer of all rights, calls, and maturities that may affect 
his holdings. Upon request, the Trust Officers will make such 
investments as are determined upon and directed by the cus- 
tomer. 

Should the customer desire to delegate a larger responsibility 
to the Trust Company, he can extend full authority to invest 
and reinvest personal funds. 

The majority of security holders are busy men and women 
who find it almost impossible to take the time and pains necessary 
to realize full value on such investments. Many owners of securi- 
ties are unfamiliar with the handling of the many details involved. 
Others are customarily absent from their homes or places of 
business over long periods of time, when securities must be left 
to take care of themselves. In all such cases, it is advisable to 
place them in the hands of those who are especially experienced 
in investment matters. 

The Trust Officers are always glad to explain in detail the 
advantages of placing securities under the care of the Trust 
Company. 

For corporate institutions, such as colleges, schools, a p- • / 
churches, libraries, hospitals, etc., the Trust Company has . 
the necessary facilities for serving as financial agent, tak- * 
ing charge of the investment of endowment and other funds, 
collecting and disbursing income from property, and securing to 
such institutions an efficient and economical management of all 
of its finances. 

The experience of the Rhode Island Hospital Trust Company 
in the performance of this form of service extends back over 
many decades. 

The services of the Trust Department are available to a a , * 
the treasurers of institutions, societies, and clubs, to ^ 

1 TCCLSUY6T 

relieve them of the routine details of their work, and to 

aid them in all financial matters where they may wish assistance, 

such as the preparation of statements, compilation and printing 



84 . • BANKING SERVICE - • 

of yearly reports, collection of income, and the safekeeping and 
care of securities (see "As Agent for Security Owners," page 81). 

An individual named as executor or trustee in the will 

* J of a friend may relieve himself of the heavy responsibilities 

_ involved, and at the same time secure the most efficient 

service for the estate, by engaging the Trust Company as 

his agent. Many of the services commonly rendered as agent 

have been mentioned in the preceding paragraphs. 

By law the individual executor and trustee is exempt from 
liability for money and securities deposited with the Trust Com- 
pany. Section 4, Chapter 231, of the Banking Laws of Rhode 
Island reads, in part: 

"Every trust company shall have the power: . . . 

"(b) To receive from executors, administrators, assignees, 
or receivers, trustees, custodians, conservators, or guardians of 
the estate of any person, moneys in their hands, and to allow 
such rate of interest thereon as may be agreed upon; and the 
deposits so made shall discharge the said executor, administrator, 
assignee, or receiver, trustee, custodian, conservator, or guardian 
so making the same from all personal liability for any loss or 
damage which may ensue to the estate in his hands by reason 
of having made such deposit. 

"(c) To receive from executors, administrators, assignees, 
or receivers, trustees, custodians, conservators, and guardians, 
bonds, notes, mortgages, certificates of stocks and other securities, 
as well as moneys, and to collect, pay over, or invest the divi- 
dends, income, interest, and profits thereof according to the 
requirements of the trust upon which the same may be held by 
said depositors and received by said trust company; and such 
executors, administrators, assignees, or receivers, trustees, cus- 
todians, conservators, and guardians depositing any of such 
securities with said trust company shall be exempt from liability 
therefor as if they had deposited moneys in their hands with the 
said corporation.' ' 



BANKING SERVICE • • 85 



Safe Deposit Department 

ONE of the most valuable services of the modern bank is 
the protection afforded to valuable property of all kinds 
through the Safe Deposit Department. The safe de- 
posit facilities of the Rhode Island Hospital Trust Company may 
be described as typical of those offered by the country's leading 
banking institutions. 

500-Ton Vault 

The Safe Deposit Department of this Company is equipped 
with one of the strongest vaults ever constructed. Its total 
weight is 500 tons. Its two entrances are guarded by doors 
weighing 25 tons each, and swinging on 22-ton frames. 

Although located in the banking building, the vault is in 
reality an entirely separate structure, resting on foundations of 
its own. 

It has the unusual characteristic of being completely visible 
underneath, as well as from the top and four sides, so that 
attack at any point may be instantly detected. Except at points 
where the steel structure rests on solid piers, the space under it 
is open. Observation wells extend down from the floor outside 
its walls, with mirrors at the bottom, set at an angle of 45 °, which 
reflect to the eye of any observer above the open spaces under 
the vault, which are, of course, brilliantly lighted. Open cor- 
ridors extend around all four sides, and the vault's top is built into 
the main floor of the banking room immediately above. 

The construction of the 3-foot walls embodies every device 
known to modern engineering to make them impervious to the 



86 - ■ BANKING SERVICE ♦ ■ 

most scientific attack. Even the Blau-gas torch, the robber's 
most effective weapon in attacking steel, is here rendered power- 
less by substantial layers of crushed glass slag, in addition to the 
three grades of steel (adapted to resist different forms of drilling) , 
concrete, cast copper, and iron of which the vault's walls are 
constructed. 

A special waterproofing element is included in the concrete 
mixture. The doors when locked are forced into ground seats 
against packing, thus rendering the vault water-tight and steam- 
tight as well as explosion-proof. 

This vault illustrates with peculiar impressiveness the 
physical aspects of security. But there is more to it than mere 
strength. The walls, doors, roof, and floor are equipped with an 
electric signal system which connects with the offices of the Rhode 
Island Electric Protective Company. The first attempt to force 
entrance into the vault would instantly bring a reinforcement of 
guards to aid the Company's own watchmen, who are on duty 
day and night. 

x _ .. . The identification plan as practiced by the Depart- 

J ment makes sure that no unauthorized person shall gain 

entrance to the vault. 

Upon renting a safe deposit box, the customer writes 
his signature upon the contract, and this signature pro- 
vides a means of identification for future reference. The 
customer also files a personal identification card which contains 
essential data. 

Where several officers possess the right of access to an organi- 
zation safe deposit box, as in the case of corporations or associa- 
tions, the contract specifies each individual authorized to have 
access to the box. In addition, each of these designated officials 
must write his or her signature upon the contract. Should there 
be a change of officers at any time, a certified copy of the vote 



• • BANKING SERVICE • • 87 

making this change must be filed with the Safe Deposit Depart- 
ment before the new appointee is permitted to use the box. 

When the holder of a box enters the Safe Deposit Depart- 
ment, he goes to the main desk, where he receives a slip upon 
which is written his name and box number. Sometimes as an 
aid to identification, he may be asked to sign his name. This 
slip is stamped by a time-clock which prints upon it the hour, 
the day of the month, and the year. (See illustration — page 16.) 
This slip passes him through the heavy steel-barred gate, where 
he is met by a vault attendant who conducts him to his partic- 
ular box. 

The box holder leaves his pass slip with the vault attendant. 

These time-stamped slips are retained in the Department for 
the convenience of the customer, and serve as a permanent record 
of all the visits he has made to his box. 

This identification system serves three purposes. It prevents 
any unauthorized person from entering the vault. It provides a 
record of all visits that he or his deputy has made to his box, 
which at any time may prove of value to the safe deposit box 
holder. It makes it easier for the bank to trace the ownership 
of any articles or papers that a customer may have overlooked 
in the coupon rooms. 

The Safe Deposit Department is prepared to furnish 
boxes of all sizes, from small ones suitable for the needs /*f» . 
of the individual with but a few securities or valuable °* tZ6S 

papers, to large safes divided into any desired number of com- 
partments to meet the needs of large corporations. 

Each of these boxes has a six-tumbler lock which can be 
opened only with both the ' "customer" and the "guard" keys 
operating in combination. Hence, no box can be opened except 
by its owner with the cooperation of an attendant of the vault, 
making it impossible for anyone but the owner to obtain access. 



88 • • BANKING SERVICE - • 

There are also boxes with double combinations, one known by 
the customer, or another officer of the organization controlling 
box, and the other by the guard or by two officers of the organiza- 
tion, the two combinations being operated simultaneously to 
open the box. 

To Keep Valuable Papers 

One of these safe deposit boxes affords the greatest possible 
security for bonds, stocks, mortgages, notes, deeds, leases, life 
insurance policies, fire insurance policies, contracts, and other 
similar papers, which under ordinary conditions in the office or 
home might easily be mislaid, lost, or destroyed. Many papers 
in connection with business management and property owner- 
ship are quite irreplaceable, and for these the safe deposit box is 
indispensable.* 

Even though one may have a good fireproof and burglar-proof 
safe in his own office, there are many papers that he should keep 
in a safe deposit box, for in the event of a serious fire, the chances 
are that his office safe, even though thoroughly fireproof, may 
not be accessible for several days just at the time when he may 
have the greatest need for some of the papers. 

The cost of safe deposit service is so small in proportion to 
its real value that every person having securities or papers of 
importance can well afford to avail himself of this protection. 
Boxes 2}/2 x 5J^ x 12 inches, generally ample for the individual, 
can be had at the Rhode Island Hospital Trust Company for a 
very small annual rental. 



*The reader will note that we have not recommended that wills be kept in a safe deposit 
box. A better arrangement is to file a will with the bank, taking a receipt for the document. 

The will is then filed in the bank's vault. Upon the maker's death the bank delivers 
the will to the proper person. 

This simple method of handling a will obviates any possibility of its being overlooked 
or destroyed and makes certain that it will be produced intact and without delay whenever 
it may be required. 

Of course, the maker of the will may at any time withdraw the document from the 
bank's custody should he so desire. 



• • BANKING SERVICE • • 89 

Bulk Storage for Household Valuables 

In addition to the main vault containing safe deposit boxes 
for papers and jewels, the Safe Deposit Department maintains a 
special vault for the storage of more bulky valuables. 

Almost every home contains numerous highly-prized articles 
such as paintings, porcelain, pottery, antiques, laces, and silver. 
Frequently these possessions are heirlooms of value greater than 
that of price alone. During vacation time, or whenever one's 
house is temporarily closed, the bulk storage vault may be con- 
veniently utilized for the safe-keeping of such articles. 

Many customers make a practice of keeping certain house- 
hold valuables in the vault all the time except when actually 
using them, and are thus constantly protected from all danger of 
loss through fire or theft. 

Salesmen and others carrying valuable samples, plans, or 
models, are afforded excellent facilities at this Department 
for the safe-keeping of their sample cases overnight or for any 
desired time. 



90 • • BANKING SERVICE 



Agricultural Department 

THE fundamental purpose of the Agricultural Department 
is to bring together, on terms of mutual understanding and 
cooperation, two important factors of community life: 
agriculture and banking. 

One of the greatest problems the New England farmer has 
had to solve is how to obtain sufficient credit to carry out his 
work. Living, in most cases, at some distance from the business 
centers, the farmer could not easily maintain a cooperative 
contact with his fellow business men. And the usual result was 
that the farmer had to work out his own salvation as best he 
could. 

The Rhode Island Hospital Trust Company was one of the 
first banking institutions in New England to recognize the need 
for more active cooperation between agriculture and business in 
general, by establishing a special department through which those 
engaged in agricultural enterprises might have freer access to the 
services which the Trust Company renders. 

To this Department the farmer can bring his business prob- 
lems with full assurance that he will be accorded the same helpful 
service that is accorded the manufacturer or merchant. 

Working Capital for Farmers 

Through the Agricultural Department this Company stands 
ready to lend the farmer working capital for producing and 
marketing his crops, and under the same conditions as govern 
the lending of money to manufacturer, merchant, or any other 
business man. (See illustration financial statement — page 94.) 



• • BANKING SERVICE • • 91 

However, the furnishing of working capital at reasonable rates 
is but one aspect of the service of the Agricultural Department. 

Useful Information 

In charge of this Department are men of long experience in 
agricultural and business matters. Through them the farmer 
may obtain information and advice which may be of the utmost 
value. 

The Department shows its customers how to keep accurate 
accounts and records, so that they can tell at all times whether 
they are operating at a profit or loss. It encourages the breed- 
ing of pure bred stock, the utilization of labor saving machinery, 
cooperation in buying and selling, and advises the farmer in the 
matter of adapting these practices to his particular enterprises. 

Briefly, the Agricultural Department stands ready to help 
the farmer in every way — buying, producing, marketing — and 
welcomes the opportunity to extend its services into new chan- 
nels through which it may be of greater usefulness. 



Conclusion 



Ask Your Banker 

A BANK, like any other business institution, flourishes only 
in proportion to the service it renders. And the more 
progressive the bank, the greater will be its desire to 
serve in ways other than those provided for in technical banking 
facilities. 

The Rhode Island Hospital Trust Company typifies the 
modern, progressive bank in the complete range of banking 
services which it provides. More than that, it is representative 
of the leaders in that most helpful form of banking which wel- 
comes every opportunity to cooperate with customers toward the 
achievement of practical and worthy business aims. 

Since its founding, in 1867, this Company has been keenly 
interested in the advancement of Rhode Island's industry and 
commerce, always holding itself in readiness to assist to the full 
extent of its ability each and every customer who requires 
specific forms of service or personal counsel. 

With its experience of more than half a century upon which 
to found new forms of utility, and with eagerness to adapt itself 
to the growing needs of the community of which it has so long 
been a conspicuous part, this Company invites all customers to 
call upon it for whatever form of banking and business assistance 
may be desired. 

This book has been published and presented to you in order 
that you may become more intimately acquainted with the vari- 
ous forms of service that the Trust Company regularly renders, 
and to enable you to use these services in such a way that your 



BANKING SERVICE 



93 



Coupons for collection should 



be left at least ten days before maturity. 



Providence, R- 



, fa*?)-? 



192 



Rhode Island Hospital Trust Co 



/ 



When Due 



Bease enter the mo m n S Coupons for Collin 
for account ofW^ ifa* 

ax-ioM-o-ai ff ~" "~ 

Name of Coupon 
mSSlj^vu OWNERSHIP CERTIFICATE— TAX NOT TO BE PAID AT SOURCE 

TJ, S. IhTEBHAI,Rkvbntjb INTEREST ON BONDS AND OTHER SIMILAR OBLIGATIONS OF DOMESTIC AND RESIDENT CORPORATIONS 




Nake 
Adphess 



y**"" 1 ^ ©EBTOry»GANIZATJ<5N >o 



Due dati 

ISSUP 







Name 

Street. 

Ctrr 



„— OWNER OF BONDS (Give name in toll) 

&2fc«dL^^£*!'. state „.ML; 



OWTSfER 
(Citizen or resident of TJ, S.) 



TEBE3T ON BONDS AND SlMILAB OBLIGATION!) 



the interest entered herein was derived falls within the class of persons or organiza- 
tions opposite which the amount of such interest is entered ana is entitled to such 
interest without deduction ol tax. 




Coupon collection forms to accompany coupon deposits. 



94 



BANKING SERVICE 



Stateujent made 
Address 






Agricultural Department 



To the Rhode Island Hospital Trust Company: 



For the purpose of procuring and establishing or edit from time 



and 



ability to pay all claims or demands against me, I will immediately 
notify, in writing, the Rhode Island Hospital Trust Company, 



Assets 




Liabilities 


Cash in Bank and Savings 


3Zf 


00 


Owing -on notes to Bank . 


, 


__ 


Loaned on notes 






Owing on notes to others 


~3oo 


00 


Amount owed me Ar*t4\laJAss> 


(nTS 


CO 


Owing for current bills 


*Joo 


00 


Investments sfA***.&iu~ &<r*Js 


1 oo 


00 

00 








Prdducts on Hand uj^-^Cff 


63o 


00 








Live Stock 


%%.%o 


00 








Real Estate Owned 


qooo 


00 


Mortgages on Real Estate 


2.S00 


00 


Machinery and Equipment 


$Z$1 


00 


)ther De^btS'^UAAa.uQt Jm& 


37 


Sb 


Other Assets 














... «. 


06 


Dotal Liabilities 


32.3? 


Sh 




?et Worth 


I*,*?? 


So 


Total 


Total 


/4,S37 


00 



Profit made last year t %$&o.<k> 

Insurance on Buildings $3o<w. Equipment I n . L ive Stock. % Life f loo o. 

Amount- of Loan Requested % I&QQ. °o Purpose for which loan is to 

be use d r£Uxfra^ffc*&A^jA^ 



(o farted J 



7(0OVvt^slAjJJlJuast*v> 



Agricultural financial statement. 

See "Agricultural Department" — page 90. 



• • BANKING SERVICE • ■ 95 

banking connection may become more and more valuable to you 
as the years go on. 

Necessarily, the banking requirements of individuals differ 
according to particular circumstances. If in your business or 
personal affairs there are banking problems that are not answered 
in this book, and there are no doubt many, do not hesitate to 
ask your banker for information and advice. 

He has made banking and business problems a lifelong study, 
and if, as is the case with the officers of the Rhode Island Hospital 
Trust Company, he is imbued with the constructive, friendly 
spirit of modern banking, he will be found only too glad to make 
the benefits of this experience freely yours. 



Index 



Acceptance : 

bank, 58; illustration, 54. 
discounting trade, 38 and 58; 
eligibility of trade for re-discount, 58. 
trade, 57; illustration, 53. 

Accounts: 

certificate of deposit, 25 et seq. 

checking or call, 12 et seq. 

classes of, 9. 

how to open, 10. 

participation or savings, 27 et seq. 

Administrator: 

Trust Company as, 71. 
"with will annexed," 72. 

Agent : 

financial, 83. 

fiscal for corporations, 67. 
for executor and trustee, 84. 
for security owners, 81. 
for treasurer, 83. 

Agricultural Service: 
explanation of, 90 et seq. 

Bank Check: 

certified, 22; illustration, 33. 

counter, 22. 

endorsement in blank, 19. 

endorsement in full, 19. 

endorsements upon, 18 et seq. 

explanation of, 17. 

forgeries and alterations, 20. 

how to endorse, 18 et seq. 

how to write, 17. 

illustration of, correctly written, 15. 

illustration of, endorsed in blank, 15. 

illustration of, endorsed in full, 15. 

illustration of, written by check-writing 

machine, 16. 
importance of signature upon, 18. 
record of, 23. 
stale, 24. 

stopping payment upon, 22 et seq. 
voucher, 21. 

written by check- writing machine, 21. 
written on safety paper, 21. 

Bank Credit, see Loans. 

Bank Deposits: 

checking accounts, 12. 

foreign, 52. 

savings accounts, 11 and 29. 



Banking: 

relationship between business and, 7. 
underlying principles of, 7. 

Bonds: 

certification of, 64. 
trustee for, 65. 

Business Policy: 

assistance in establishing a, 48. 

Business Services: 

credit information, 46. 
information on trade conditions, 46. 
on forming a business policy, 48. 
on starting in business, 47. 
raising capital, 47. ; 

Capital: 

raising through issue of securities, 47. 

Certificate of Deposit: 

as temporary investment, 26. 
explanation of, 25 et seq. 
illustration of, 54. 
negotiability of, 26. 

Certified Check: 

explanation of, 22; illustration, 33. 

Checking or Call Accounts: 

as depositary for active funds, 12. 

commercial, 13. 

drawing against, 12. 

for corporations, 13. 

for reserve funds, 14. 

for special funds, 14. 

for temporary funds, 17. 

for whom suitable, 12. 

institutions, 13. 

interest paid upon, 12. 

partnerships, 13. 

Check Protection: 

by check- writing machine, 21. 
by safety paper, 21. 

Clearing: 

illustration check passed through, 33. 

Co-Executor: 

Trust Company as, 71. 

Collateral Loans: 
explanation of, 32. 
illustration of note, 36. 

Collateral Trusts: 
explanation of, 65. 



Commercial Accounts: 

collection of checks and drafts, 13. 

corporations, 13. 

handling active funds, 13. 

individuals, 14. 

institutions, 13. 

partnerships, 13. 

pay-rolls, 13. 

Commercial Loans: 
explanation of, 37. 

Conservator: 

Trust Company as, 81. 

Corporations: 

authority to sign checks, 13. 

checking accounts of, 13. 

fiscal agents for, 67. 

reorganization of, 68. 

specific information required on opening 

accounts of, 13. 
trust services for, 64 et seq. 

Counter Check: 
explanation of, 22. 

Coupons: 

illustrations of collection forms for, 93. 

Credit Statement: 

illustration of, for farmers, 94. 

Currency: 
foreign, 49. 
issuance of, by Federal Reserve, 44. 

Demand Note: 
collecting interest on, 31. 
explanation of, 31. 

Deposit : 

State's requirement of, by Trust Com- 
panies, 69. 

Depositary: 

the bank as a, 9 et seq. 

Deposit Ticket: 
how to fill out, 24. 
illustration of, properly filled out, 16. 

Discount : 

of promissory time note, 31. 

of trade notes and acceptances, 38. 

Discounting Bills: 
loans for, 40. 

Drafts: 

buying foreign, 47. 

selling, on New York, etc., 47. 

Endorsed Notes: 
explanation of, 32. 
illustration of, 53. 



Endorsement : 

in blank, 19; illustration, 15. 
in full, 19; illustration, 15. 
rubber stamps for, 20. 

Escrow: 

explanation of, 68. 
Executor: 

agent for, 84. 

duties of, 70. 

Trust Company as, 70 et seq. 

Extensions: 

how to finance, 41. 

Federal Reserve System: 
currency issues of, 44. 
explanation of, 42 et seq. 
twelve districts of, 42. 

Foreign Draft: 

illustration of, in francs, 73. 
illustration of, in lire, 73. 
illustration of, in sterling, 73. 

Foreign Services: 

buying and selling foreign exchange, 49. 
codes and translations, 51 and 52. 
foreign currency, 49. 
illustration foreign drafts, 73. 
illustrations commercial letter of credit, 

55 and 56. 
to facilitate exports and imports, 49. 
travelers' cheques, 50; illustrations, 76. 
travelers' letters of credit, 50; illustrations, 

74 and 75. 
trade opportunities, 50. 

Forgeries and Alterations: 
of bank checks, 20. 

Guardian: 

Trust Company as, 80. 

Income Tax: 

law of, as applies to fiscal agency, 67. 
reports for returns, 82. 

Institutions: 

checking accounts of, 13. 
types of, requiring accounts, 13. 

Interest: 

on certificates of deposit, 26. 
on checking accounts, 12. 
on savings accounts, 28. 

Investment and Statistical Service: 
information on securities, 60. 

Joint Accounts: 
checking, 29. 
savings, 29. 



Law: 

concerning withdrawals from savings 
accounts, 28. 

exempting executor and trustee from 
liability for funds deposited, 84. 

governing issue of duplicate participation 
book, 11. 

relating to stale checks, 24. 
Letter of Credit : 

commercial, 49. 

illustration export, 56. 

illustration import, 55. 

illustrations travelers', 74 and 75. 

travelers', 50. 
Liability: 

on forged and altered checks, 20. 
Living Trusts, see Trusts. 
Loans : 

acknowledgment of, 31. 

a fundamental banking service, 30. 

collateral, 32. 

commercial, 37. 

endorsed notes, 32; illustration, 53. 

for short term needs, 30. 

illustration of collateral note, 36. 

to discount bills, 40. 

to finance extensions, 41. 

to make up seasonal shortages, 39. 

to take advantage of markets, 40. 

Mortgages: 

collateral trust, 65. 

how to obtain, on real property, 62. 

Participation Accounts, see Savings Ac- 
counts. 
Participation Book: 

explanation of, 11 and 29. 

procedure on loss of, 11. 

Rhode Island law governing issue of 
duplicate, 11. 
Partnerships: 

agreements of, as they apply to account, 
13. 

authority to sign checks, 13. 

checking accounts of, 13. 
Pass Book: 

making deposits without, 11. 

purpose of, 11. 
Passports: 

assistance in obtaining, 52. 
Pass Slip: 

to safe deposit vault, 87. 
Pay-Rolls: 

blanks for currency requisitions, 13. 

handling of, 13. 



Personal Checking Accounts: 
interest paid on, 14. 
uses of, 14. 

Promissory Notes: 
demand, 31. 
discounting, 31. 
time, 31. 

Property: 

management of real, 63. 

Reconcilement Blank: 
illustration, 35. 
use of, 25. 

Record of Checks: 
how to keep, 23. 

reconciling with bank statement, 23 et 
seq. 

Re-discount : 

a Federal Reserve function, 43. 
eligibility of notes for, 44. 

Reserve Funds: 
checking accounts for, 14. 

Safe Deposit Service: 

bulk storage for household valuables, 89. 
explanation of, 85 et seq. 
identification, 86. 
vault, 85 et seq. 

Safety Paper: 

for bank checks, 21. 

Savings Accounts: 

as an investment, 27 et seq. 

bank's investments for protection of, 27 
et seq. 

dividend dates for, 28. 

explanation of, 27. 

law regarding withdrawals from, 28. 

participation book, 11 and 29. 

table showing cumulative effect of regu- 
lar deposits in, 29. 

Seasonal Shortages: 
loans to make up, 39. 

Securities: 

agent for owners of, 81. 
collecting earnings on, 82. 
information on, 60. 

Signature Card: 
purpose of, 10. 

Special Funds: 

checking accounts for, 14. 

trustees' exemption from liability for, 14. 

Stale Checks: 

danger in holding, 24. 



Statement of Account : 

as issued by bank to customers, 25; 

illustration, 34. 
reconcilement of customer's record with, 

23 and 25; illustration, 35. 

Stock: 

agent for transfer of, 64. 
registrar for issues of, 64. 

Stopping Payment: 
how effected, 22 et seq. 

Time Note: 

discounting, 31. 
explanation of, 31. 

Trade Conditions: 
information on, 46. 

Trade Opportunities: 
foreign, 50. 

Transfer of Funds: 

by telegraph or cable, 47. 

Travelers' Cheques, see Travel Funds. 

Travelers' Letters of Credit, see Travel 
Funds. 

Travel Funds: 

travelers' cheques, 50; illustrations, 76. 
travelers' letters of credit, 50; illustrations, 
74 and 75. 

Treasurer : 
agent for, 83. 

Trustee: 

agent for, 84. 

Trust Company as, 77. 

Trust Funds: 
on deposit, 84. 



Trusts: 

under will, 72 et seq. 

voluntary or living, 77 et seq. 
Trust Services: 

administrator, 71. 

agent for executor or trustee, 84. 

agent for security owners, 81. 

agent for treasurer, 83. 

co-executor, 71. 

conservator, 81. 

escrow, 68. 

executor, 70. 

financial agent, 83. 

fiscal agent for corporations, 67. 

for corporations, 64 et seq. 

for individuals, 69 et seq. 

guardian, 80. 

registration of stock and certification of 
bond issues, 64. 

reorganizations, 68. 

transfer of stocks, 64. 

trustee, 77. 

trustee for bond issues, 65. 
Two Name Paper, see Endorsed Notes. 

Uncollected Funds: 
drawing against, 24. 

Vault: 

bulk storage, for household valuables, 89. 
safe deposit, 85 et seq. 

Voluntary Trusts, see Trusts. 

Voucher Check: 

description of, 21; illustration, 33. 

Will: 

safe-keeping of, 88. 
trusts under, 72. 



